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ECONOMICS  OF 
INTERURBAN  RAILWAYS 


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Electrical  World         TheEng^nseringandMming  Journal 
En^eerin^  Record  Engineering  News 

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ECONOMICS  OF  INTER 
URBAN  RAILWAYS 


BY 

LOUIS  E.  FISCHER 

CONSULTING   ENGINEER,    ST.    LOUIS,     MO. 


First  Edition 


McGRAW-HILL  BOOK  COMPANY,  Inc. 

239  WEST  39TH  STREET,  NEW  YORK 
6  BOUVERIE  STREET,  LONDON.  E.  C. 

1914 


Copyright,  1914,  by  the 
McGraw-Hill  Book  Company,  Inc. 


THE .  MAPLE*  PRESS. YORK.  PA 


CY 

01 


36^ 


PREFACE 


Notwithstanding  the  fact  that  there  are  over 
'twenty  thousand  miles  of  electric  suburban 
^_and  electric  interurban  railway  now  in  opera- 
tion in  the  United  States,  of  which  the  operat- 
ing records  are  available  through  the  medium 
of  the  various  State  Commission  reports,  and 
otherwise,  there  is  Uttle  data  of  actual  and 
proven  information  so  compiled  as  to  be  useful 
.  to  the  great  number  of  persons,  residing  in 
•^   almost  every  community,  who  are  promoting, 
J'  or    are    encouraging    the    promotion    of,    an 
$  electric  interurban  railway. 
3       The  fact  that,   in   almost  every  instance, 
j   electric  interurban  railways  have  proven  to 
be  popular  utiUties,  has  caused  much  develop- 
ment in  the  construction  of  such  properties, 
irrespective  of  the  possible  or  probable  eco- 
j  nomic  result  incident  to  their  operation,  and, 
d  in    consequence,    many   of   the   undertakings 
rj  have  been  unprofitable.     This  condition,  which 
is  parallel  with  that  of  the  early  days  of  steam 
\  railroad  construction,  has  caused  the  investing 


614034 


vi  PREFACE 

public  to  regard  electric  interurban  railway 
securities  with  some  suspicion. 

In  view  of  these  existing  conditions,  it  is 
beUeved  that  there  is  a  need  for  a  resume  of 
the  actual  economic  results  from  the  operation 
of  the  existing  electric  interurban  railways,  for 
the  purpose  of  enabhng  the  layman  to  compre- 
hend the  fundamental  conditions  essential  to 
an  economically  successful  road,  and  the  in- 
vestor to  discriminate  between  fundamen- 
tally good  or  bad  electric  interurban  railway 
securities. 

L.  E.  F. 

St.  Louis,  Mo., 
December,  1913. 


CONTENTS 

Page 

Preface     v 

CHAPTER  I 

Inception  and  Development  op  Electric  Traction      1 
The  electric  suburban  railway — The  electric  inter- 
urban  railway. 

CHAPTER  II 

Classifications  and  Definitions 7 

Classification  of  electric  railways — Classification  of 
type  of  electric  interurban  railways,  also  of  terri- 
tories served — Classification  of  population  served — 
Classification  of  trafiic  sources. 

CHAPTER  III 

Operating  Revenue 16 

Relation  between  "revenue  from  transportation" 
and  "revenue  from  other  than"  relation  between 
''passenger  revenue"  and  "other  than  passenger 
revenue,"  power  sales  eliminated — Possibility  of 
general  freight  business  for  electric  interurban 
railways — Relation  existing  between  operating 
revenue  and  population  served — Statistics  of 
revenue  of  lines  productive  of  earnings  from 
sources  I  and  II — General  conclusions  concerning 
revenue  from  source  II — Other  statistics  concern- 

vii 


viii  CONTENTS 

Page 
ing  revenue  from  operation,  sho\\ang  slightness  of 
relation  between  revenue  and  car  miles  operated 
Comparison  of  electric  interurban  and  steam  rail- 
way revenues — Conclusion. 

CHAPTER  IV 

Operating  Expense 44 

Way  and  structures — Statistics  of  actual  operating 
expense  for  way  and  structures  on  typical  electric 
interurban  railways — Most  important  primary 
accounts  under  way  and  structm-es — Equipment 
statistics  of  actual  operating  expense  for  equipment 
on  typical  electric  interurban  railways — Main- 
tenance and  depreciation  of  equipment — Traffic — 
Statistics  for  actual  operating  expense  for  traffic  on 
typical  electric  interurban  railways — Conducting 
transportation — Statistics  of  actual  operating  ex- 
pense for  conducting  transportation  on  typical 
electric  interurban  railways — Principal  primary 
accounts  for  conducting  transportation — General 
and  miscellaneous — Statistics  of  actual  operating 
expense  for  general  and  miscellaneous  items  on 
typical  electric  interurban  railways — Total  oper- 
ating expense — General  conclusions  concerning  the 
cost  of  operating  electric  interurban  railways — 
Taxes. 

CHAPTER  V 

Cost  of  Construction 73 

Classification  of  construction  of  costs — Primary 
accounts  for  road  construction — Primary  accounts 
for  cost  of  equipment — Primary  accounts  for 
general  construction  expenditures — General  con- 
clusions concerning  cost  of  construction. 


CONTENTS  ix 

Page 
CHAPTER  VI 

Economic  Relations,  Operating  Revenues,  Operat- 
ing Expenses,  and  Cost  of  Construction  ...  99 
Hypothetical  application  of  the  heretofore  estab- 
lished principles  governing  o'perating  revenues, 
operating  expenses,  construction  costs — Summary 
— Modification. 

CHAPTER  VII 

Concluding  Remarks 112 

Index 113 


1 


ECONOMICS  OF  INTER- 
URBAN  RAILWAYS 

CHAPTER  I 

INCEPTION   AND   DEVELOPMENT   OF 
ELECTRIC  TRACTION 

THE  first  authentic  record  of  a  well-con- 
ceived plan  to  obtain  tractive  power  by 
means  of  electricity  dates  from  the  early  '50 's, 
and  between  that  time  and  the  year  1880, 
when  Edison  and  Field  became  interested, 
many  attempts  were  made  to  work  out  a  fea- 
sible scheme,  but  all  of  them  lacked  commer- 
cial value. 

The  real  birth  of  the  electrically  operated 
railway,  as  a  practical  method  of  transporta- 
tion, was  in  1888,  when  Frank  J.  Sprague 
equipped  a  short  electric  railway  line  in  Rich- 
mond, Va.,  which,  though  crude  from  the 
standard  of  to-day,  was  successful.     Previous 

to  this,  at  expositions  and  elsewhere,  electric 

1 


2       ECONOMICS  OF  INTERURBAN  RAILWAYS 

railways  had  been  built  for  exhibition  and  ex- 
perimentation. 

The  practicability  of  the  electric  railway  being 
quickly  demonstrated,  there  became  an  imme- 
diate demand  for  this  means  of  traction,  and  by 
the  year  1890  there  had  been  about  two  hun- 
dred electric  railway  companies,  with  a  trackage 
of  about  1200  miles,  organized  in  the  United 
States.  In  England  and  Germany  the  work 
was  taken  up,  and  some  important  installations 
were  undertaken.  During  the  next  ten  years 
far-reaching  improvements  were  made  in  the 
equipment,  and  by  the  year  1902  there  were 
over  seven  hundred  electric  railways  in  opera- 
tion in  this  country,  with  an  aggregate  total  of 
about  22,000  miles  of  track — a  truly  remark- 
able growth. 

The  Electric  Suburban  Railway 

From  the  electric  railway,  operating  over  and 
along  the  streets  of  a  city,  it  was  an  easy  step 
to  the  electric  suburban  railway,  which  origi- 
nated in  the  simple  extension  of  a  city  line  to 
the  suburbs  of  that  city.  It  was  speedily  rec- 
ognized that  in  the  electric  suburban  railway 


DEVELOPMENT  OF  ELECTRIC  TRACTION      3 

was  the  solution  of  the  vexing  problem  of  how 
to  remedy  the  ever-increasing  congestion  of 
population  within  a  narrow  zone  around  the 
commercial  center  of  each  of  the  large  cities. 
With  the  development  of  the  electric  suburban 
railway  came  the  outward  development  of  the 
growth  of  the  cities  for  residential  purposes, 
bringing  benefits  to  those  working  in  the  cities 
so  great  and  far-reaching  as  to  be  incalculable. 
Step  by  step  with  the  increasing  importance 
of  electric  traction,  improvements  in  equip- 
ment and  operation  were  made,  the  inventor 
never  lagging  behind  the  constructor. 

The  Electric  Interurban  Railway 

The  next  step,  the  development  of  the  elec- 
tric interurban  railway,  was  of  much  greater 
magnitude  than  that  of  the  simple  evolution  of 
the  suburban  railway.  The  problem  of  the 
transmission  of  power  over  long  distances  had 
to  be  solved,  and  there  were  many  other  ques- 
tions which  the  pioneer  had  to  work  out.  The 
great  minds  of  the  master  electricians  soon 
solved  the  power  problem  and  gave  to  the  world 
the  rotary  converter,  improved  transformers. 


4       ECONOMICS  OF  INTERURBAN  RAILWAYS 

and  the  transmission  of  high  potential  alter- 
nating current  to  substations. 

The  earliest  attempt  at  electric  interurban 
railway  construction  was  about  the  year  1900, 
and  it  was  not  until  the  year  1902  that  the  de- 
velopment became  general. 

The  pioneer  builders  of  electric  interurban 
railways  were  confronted  with  the  problem  of 
deciding  whether  the  tracks  of  the  railway 
should  be  built  on  private  right-of-way,  or  along 
the  pikes  and  highways.  To  build  the  tracks 
on  private  right-of-way,  across  open  country  of 
broken  topography,  to  build  bridges  over  rivers 
and  streams,  and  in  fact,  to  do  all  of  those  things 
in  track  construction  that  the  steam  railroads 
had  done,  appeared  to  them  to  necessitate  the 
expenditure  of  an  overwhelming  amount  of 
money,  and  they,  unfortunately  for  operating 
efficiency,  adopted  the  alternative  of  utilizing 
the  pikes  and  highways.  The  early  interurban 
railway  was,  therefore,  in  reality  an  exten- 
sion of  the  suburban  railway,  made  possible 
by  the  then  recent  developments  in  power 
transmission. 

The  pioneer  lines  having  demonstrated  the 
feasibility  and  practicability  of  the  project,  the 


DEVELOPMENT  OF  ELECTRIC  TRACTION      5 

demand  for  interurban  railways  became  gen- 
eral, and  later  builders  began  to  utilize  the 
private  right-of-way  instead  of  the  pikes  and 
highways  for  their  tracks,  and  from  that  time 
the  electric  interurban  railway  became  the 
popular  utility  it  now  is. 

When  carrying  passengers  between  towns  it 
became  necessary  to  carry  their  baggage,  and, 
from  this  beginning,  the  handling  of  express 
matter,  United  States  mail,  milk  and  broken 
freight,  was  a  natural  sequence  in  evolution. 

In  solving  the  transportation  problems  which 
became  more  abstruse  as  the  mileage  of  individ- 
ual roads  increased,  the  electric  interurban 
railway  followed  the  practice  of  the  steam  rail- 
roads, and  adopted  train  schedules  and  dis- 
patching systems,  and  rules  and  devices  for  the 
safety  of  its  operation.  As  the  traffic  increased, 
trains  of  cars,  under  multiple  control,  were 
operated,  and  in  some  instances  dining  and 
sleeping  cars  were  added  to  the  passenger 
equipment. 

The  electric  interurban  railway  policy  has 
always  been  aggressive  in  its  reach  for  business, 
and  after  acquiring  success  in  the  passenger, 
express  and  broken  freight  field,  the  large  earn- 


6       ECONOMICS  OF  INTERURBAN  RAILWAYS 

ings  to  be  derived  from  the  handling  of  bulk 
freight,  and  the  interchange  of  traffic  with  other 
roads,  was  sufficient  incentive  for  some  of  the 
larger  electric  railways  to  enter  the  field  as 
general  freight  carriers.  This  development  has 
been  of  recent  date,  and  at  the  present  time  is 
restricted  to  a  few  of  the  largest  electric  railway 
systems,  and  these  systems  are  being  operated 
on  the  same  basis  as  the  steam  railroads,  and 
are  doing  identically  the  same  carrying  business, 
including  the  interchange  of  traffic  and  equip- 
ment with  them. 

The  growth  of  the  electric  suburban  and 
electric  interurban  railways  has  been  wonder- 
ful, as  since  the  year  1902  there  has  been 
constructed,  and  placed  in  operation,  over 
twenty  thousand  miles  of  track.  The  devel- 
opment has  been  especially  active  in  the  states 
of  New  York,  Pennsylvania,  Massachusetts, 
Ohio,  Indiana,  Illinois  and  California,  as  in 
these  states  more  than  thirteen  thousand  miles, 
out  of  the  total  of  about  twenty  thousand  miles, 
have  been  constructed. 


CHAPTER  II 
CLASSIFICATIONS  AND   DEFINITIONS 

THE  diversity  in  the  scope  of  operation  of 
the  various  electric  railways,  popularly 
called  electric  interurban  railways,  renders  an 
analysis  of  their  earnings  and  expenditures,  as 
a  whole,  unproductive  of  tangible  results.  It 
is  therefore  necessary  to  define  first  what  will 
herein  be  considered  as  an  electric  interurban 
railway,  and  second  the  terms  used  in  the  sub- 
sequent analysis  of  the  fundamental  principles 
governing  their  operating  revenues  and  ex- 
penses, and  cost  of  construction. 

Classification  of  Electric  Railways 

Electric  railways  may  be  divided  into  four 
general  classes:  Urban,  Suburban,  Interurban 
and  Commercial. 

ELECTRIC  INTERURBAN  RAILWAY 

An  electrically  operated  railway  connecting 

two  or  more  independent  distant  communities 

7 


8       ECONOMICS  OF  INTERURBAN  RAILWAYS 

and  organized  and  operated  to  carry  passen- 
gers, baggage,  United  States  mail,  express  and 
freight  in  broken  shipments.  This  railway  is 
distinct  from  an  urban  or  subm-ban  railway, 
in  that  the  latter  serves  only  the  inhabitants  of 
a  city,  or  of  a  city  and  its  suburbs,  for  the  pur- 
pose of  carrying  passengers  and  their  ordinary 
hand  baggage.  It  is  also  distinct  from  a  com- 
mercial railway  in  that  it  does  not  do,  or  under- 
take to  do,  a  general  bulk  and  interchange 
freight  business. 

Classification  of  Type  of  Electric 

Interurban  Railways,  and  also 

OF  Territories  Served 

In  considering  the  economic  results  obtained 
by  the  various  electric  interurban  railways  now 
operating,  it  is  necessary  to  classify  the  types  of 
roads,  and  also  of  territories  served,  into  two 
general  classes — the  normal  and  the  abnormal. 

NORMAL  ELECTRIC  INTERURBAN  RAILWAY — GEN- 
ERAL CHARACTERISTICS  OF 

Entrances  into  cities,  towns  and  villages 
served  by  franchises  over  city  streets. 

Private  right-of-way  outside  of  cities  and 
villages. 


CLASSIFICATIONS  AND  DEFINITIONS  9 

Roadbed  constructed  with  reasonable  curves 
and  gradients. 

Track  laid  with  70-  or  80-lb.  rail  and  standard 
ties,  2-ft.  centers. 

Power  house  of  ample  size  and  constructed 
for  economical  operation. 

Car  equipment  ample  and  of  modern  type. 

Well  constructed  primary  distributing  sys- 
tem, and  overhead,  or  third-rail,  secondary 
distributing  system. 

Substantially  hourly  service,  with  local  trains 
operating  alternately  with  limited  trains.  Lim- 
ited schedule  practically  equal  to  the  local 
schedule  of  the  competing  steam  railway  lines. 

One  or  more  broken  package  freight  move- 
ments each  way  per  day. 

Rate  of  fare  approximately  two  cents  per 
mile,  with  a  reduction  of  from  10  to  25  per 
cent,  when  round-trip  tickets  are  purchased. 

ABNORMAL    ELECTRIC    INTERURBAN    RAILWAY 

GENERAL  CHARACTERISTICS  OF 

No  entrance  into  principal  cities  served. 

Constructed  on  highways. 

Roadbed  of  such  curves  and  gradients  as  to 


10     ECONOMICS  OF  INTERURBAN  RAILWAYS 

constitute  barriers  to  the  procurement  of  a 
reasonable  portion  of  the  available  business. 

Track  construction  such  as  to  constitute  a 
barrier  to  procurement  of  a  reasonable  portion 
of  the  available  business. 

Power  house  inadequate,  and  unsuited  to 
generate  current  at  reasonable  cost. 

Car  equipment  obsolete,  insufficient  and 
imcomfortable. 

Insufficient  primary  and  secondary  distrib- 
uting systems  to  maintain  reasonable  voltage 
for  movement  of  cars. 

Two  hourly,  or  less  frequent,  service. 

No  broken  package  freight  movements. 

NORMAL  TERRITORY GENERAL  CHARACTERIS- 
TICS OF 

A  territory  made  up  of  cities,  towns  and  vil- 
lages which  are  supported  by  varied  agricul- 
tural, manufacturing  or  mining  industries,  and 
which  are  free  from  the  fluctuating  influences  of 
summer,  health  or  amusement  resorts,  or  other 
similar  traffic-creating  centers,  and  which  are 
also  free  from  serious  business  depressions  due 
to  local  industrial  conditions. 


CLASSIFICATIONS  AND  DEFINITIONS        11 

ABNORMAL    TERRITORY — GENERAL    CHARACTER- 
ISTICS OF 

A  territory  made  up  of  cities,  towns,  and 
villages,  one  or  more  of  which  is  a  large  pleas- 
ure-drawing center,  or  is  in  a  state  of  industrial 
decay  due  to  local  conditions,  or  where  the 
principal  industries  are  of  such  a  nature  as  to 
be  subject  to  long  periods  of  business  depres- 
sion, or  to  prolonged  strikes. 

Classification  of  Population  Served 

The  population  served  by  an  electric  inter- 
urban  railway,  other  than  its  tributary  farming 
population,  may  be  divided  into  three  general 
classes,  as  follows: 

Primary  Terminal  Population. 

Secondary  Terminal  Population. 

Intermediate  Town  and  Village  Population. 

PRIMARY  terminal  POPULATION 

The  population  of  the  principal  city  into 
which  the  railway  operates.  In  other  words, 
the  population  of  that  city  which  is  of  the 
greatest  commercial  importance  in  the  sense 


12     ECONOMICS  OF  INTERURBAN  RAILWAYS 

that  it  is  a  metropolis  for  the  greater  portion  of 
the  territory  served. 

SECONDARY  TERMINAL  POPULATION 

The  population  of  the  other  important  ter- 
minals, distinct  from  the  principal  terminal, 
which  are  also  of  such  commercial  importance 
as  to  attract  business  from  a  considerable  por- 
tion of  the  territory  served,  but  not  to  the 
same  extent  as  the  principal  terminal. 

INTERMEDIATE  TOWN  AND  VILLAGE  POPULATION 

The  population  of  cities,  towns  and  villages, 
served  by  the  line,  beyond  and  between  (when 
there  are  both  primary  and  secondary  termin- 
als), but  not  including  the  primary  and  second- 
ary terminals. 

4:  ^  H«  4:  ^ 

The  tributary  farming  population  residing 
within  the  territory  served  by  the  line  is  ex- 
cluded from  consideration.  In  a  normal  farm- 
ing territory  the  value  of  this  population,  from 
the  view-point  of  its  traffic  productiveness,  is 
reflected  in  the  size  and  character  of  the  towns 
and  villages  which  constitute  the  intermediate 


CLASSIFICATIONS  AND  DEFINITIONS        13 

town  and  village  population.  There  has  been 
much  importance  attached  to  the  density  of  the 
farming  population,  and  it  has  been  quite  cus- 
tomary to  approximate-  its  aggregate  within 
arbitrary  distances  of  the  Hne,  varying  from  1 
mile  to  4  miles.  Aside  from  such  estimates 
being  extremely  crude,  there  are  such  a  vari- 
ety of  local  conditions  influencing  the  extent 
of  the  zone  limiting  the  tributary  population 
that  no  uniform  principle  for  considering  its 
value  on  that  basis  can  be  established.  On  the 
other  hand,  the  towns  and  villages  constituting 
the  intermediate  town  and  village  population 
will  reflect  all  of  the  characteristics  of  the  farm- 
ing community  that  contribute  to  their  sup- 
port. If  such  a  territory  has  fertile  lands,  it 
will  support  a  greater  number  of  townspeople; 
if  the  roads  are  good  in  a  farming  community, 
the  sphere  of  the  commercial  activities  of  the 
town  will  be  increased  and  it  will  therefore  have 
a  larger  population;  and  so,  likewise,  will  pro- 
gressive types  of  farmers  have  a  bearing  on  the 
town  in  which  they  trade.  Even  though  a 
town  or  village  may  be  largely  developed  be- 
cause of  manufacturing  or  mining  industries, 
yet  to  the  extent  that  the  town  or  village  has 


14     ECONOMICS  OF  INTERURBAN  RAILWAYS 

been  supported  by  the  tributary  farming  popu- 
lation it  will  reflect  with  reasonable  accuracy 
the  value  of  the  farming  population  as  to  its 
traffic  productiveness. 

Classification  of  Traffic  Sources 

The  traffic  created  by  the  population  served 
by  an  electric  interurban  railway  will  be  con- 
sequent to  the  following  general  movements: 

Source  I: 

a.  The  intercommunication  of  the  popu- 
lation of  the  primary  terminal  and  the 
intermediate  population  served. 

b.  The  intercommunication  of  the  popula- 
tion of  the  intermediate  centers  only. 

Source  II: 

c.  The  intercommunication  of  the  popula- 
tion of  the  secondary  terminals  and  the 
intermediate  population  served. 

d.  The  intercommunication  of  the  popula- 
tion of  the  primary  terminal  and  the 
population  of  the  secondary  terminals. 

e.  The  intercommunication  of  the  popula- 
tion of  the  secondary  terminals  alone 
(if  more  than  one). 


CLASSIFICATIONS  AND  DEFINITIONS        15 

It  will  be  noted  that  the  traffic  created  by  ''a" 
and  "b,"  of  Source  I,  is  consequent  to  the  ex- 
istence of  the  primary  terminal  and  the  inter- 
mediate population,  while  the  traffic  created 
by  ''c,"  "d"  and  ''e/'  of  Source  II,  is  conse^ 
quent  to  the  existence  of  the  secondary  ter- 
minal population. 


CHAPTER  III 
OPERATING  REVENUE 

THE  Interstate  Commerce  Commission,  in 
accordance  with  Section  20  of  an  Act  to 
Regulate  Commerce,  has  prescribed  a  classi- 
fication of  the  operating  revenues  of  electric 
railways  as  follows: 

General  accounts: 
I.  Revenue  from  transportation. 
II.  Revenue  from  operations  other  than  trans- 
portation. 

Primary  accounts : 
I.  Revenue  from  transportation: 

(1)  Passenger  revenue. 

(2)  Baggage  revenue. 

(3)  Parlor,  chair  and  special  car  revenue. 

(4)  Mail  revenue. 

(5)  Express  revenue. 

(6)  Milk  revenue. 

16 


OPERATING  REVENUE  17 

(7)  Freight  revenue. 

(8)  Switching  revenue. 

(9)  Miscellaneous  transportation  revenue. 
II.  Revenue  from  operations  other  than  trans- 
portation: 

(10)  Station  and  car  privileges. 

(11)  Parcel-room  receipts. 

(12)  Storage. 

(13)  Car  service. 

(14)  Telegraph  and  telephone  service. 

(15)  Rents  of  tracks  and  terminals. 

(16)  Rents  of  equipment. 

(17)  Rents  of  buildings  and  other  property. 

(18)  Power. 

(19)  Miscellaneous. 

Relation  between  '^Revenue  from  Trans- 
portation" AND  ''Revenue  from  Other 
THAN  Transportation" 

Very  few  of  the  existing  electric  interurban 
railways  earn  an  appreciable  amount  of  revenue 
from  operations  other  than  transportation, 
except  through  the  sale  of  power.  It  is  quite 
usual  for  an  electric  interurban  railway  to  serve 
a  territory  from  which  considerable  revenue 


18     ECONOMICS  OF  INTERURBAN  RAILWAYS 

can  be  earned  by  the  sale  of  power,  but  as  the 
development  of  this  item  of  earning  is  very  de- 
pendent on  the  management  of  the  property, 
and  therefore  not  general,  it  will  be  eliminated 
from  further  consideration. 

Relation  between  '^ Passenger  Revenue" 

AND  ''Other  than  Passenger  Revenue," 

Power  Sales  Eliminated 

The  one  section  of  the  general  accounts, 
revenue  from  operations  other  than  transpor- 
tation, being  thus  considered  a  negligible  quan- 
tity in  this  discussion,  there  is  left  the  other 
main  heading  of  revenue  from  transportation. 
The  most  natural  question  arising  in  this  con- 
nection is  in  regard  to  the  relation  of  the  pas- 
senger revenue  to  the  other  revenue,  such  as 
that  from  baggage,  freight,  express,  etc.  The 
following  table  on  this  point  has  been  prepared 
for  ten  cases  indiscriminately  selected  from 
normal  roads  serving  normal  territories: 


OPERATING  REVENUE 


19 


TABLE      I— SHOWING      "PASSENGER      REVENUE"      AND 

"  OTHER  THAN  PASSENGER  REVENUE  "  FOR  TEN  TYPICAL 

SELECTED  CASES 


Case 

Passenger 
revenue 

Express, 

freight 

and  other 

non- 
passenger 
revenue 

Total 

gross 

revenue 

Percentage 
express 

and 

freight 

to  gross 

revenue 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

(10) 

$405,979 
1,210,170 
570,632 
823,346 
286,185 
872,566 
930,600 
346,205 
498,994 
197,405 

$5,720 
77,992 
35,923 
13,977 
28,212 
86,467 

137,618 
59,685 

121,574 
37,111 

$411,698 
1,939,521 
606,555 
858,135 
355,077 
959,033 
1,068,219 
405,890 
620,568 
234,516 

1.384 

5.597 

5.922 

1.618 

9.855 

9.016 

12.882 

14.704 

19.580 

15.821 

Average .  .  . 

$614,208 

$60,428 

$691,321 

8.732 

Average  on  243,229  miles  of  steam  road  in  1911: 
631,340,776  2,155,338,840  2,786,679,616  77.344 

From  the  typical  cases  above  tabulated  it  is 
apparent  that  the  predominating  item  in  the 
revenue  account  of  electric  interurban  railways 
is  passenger  revenue.  In  the  present  stage  of 
development  of  such  lines,  with  their  limited 
operations  in  the  express  and  freight  fields,  all 
the  other  than  passenger  revenue  items  compris- 
ing revenue  from  transportation  are  of  such  little 
consequence  compared  with  passenger  revenue 


20     ECONOMICS  OF  INTERURBAN  RAILWAYS 

that  the  entire  group  of  revenue  from  transpor- 
tation items  will  be  considered  together  and  will 
constitute  gross  operating  revenue  throughout 
this  discussion. 

Possibility  of  General  Freight  Business 
FOR  Electric  Interurban  Railways 

The  electric  interurban  railway,  as  we  have 
defined  it,  maintains  only  an  express  and 
broken  package  freight  service,  yet  in  the  mind 
of  the  public  there  is  a  good  opportunity  for  it 
to  take  up  a  general  freight  service.  In  view  of 
this  misconception  of  the  true  sphere  of  the 
electric  interurban  railway  and  the  exaggerated 
ideas  of  the  possibilities  for  extensions  of  elec- 
tric railway  activities  along  such  a  line  it  will  be 
well  to  point  out  briefly  at  this  point  the  funda- 
mental elements  that  are  essential  to  a  road 
which  engages  in  a  general  freight  traffic. 

General  freight  traffic  involves  the  movement 
of  commodities  in  carload  lots  in  reasonable 
numbers,  with  reasonable  frequency,  from  the 
producer  to  the  consumer,  independently  or 
jointly  with  other  carriers  by  interchange  agree- 
ment.    To  make  such  a  movement  independ- 


OPERATING  REVENUE  21 

ently,  both  the  producer  and  consumer  must  be 
served  by  the  line.  On  the  other  hand,  to 
carry  on  such  a  movement  jointly  with  other 
carriers  involves  interchange  relations  with 
these  carriers  in  the  making  of  which  electric 
interurban  railways  are  handicapped  by  the 
fact  that  they  are  mostly  parasites  of  the  pio- 
neer steam  railroads  in  the  sense  that  they 
serve  the  same  territories  by  parallel  lines  and 
compete  to  a  certain  degree  for  the  same  traffic. 
Even  though  the  interchange  relations  with 
other  carriers  exist,  still  the  superior  facilities 
of  the  steam  railroads  make  it  difficult  for  the 
electric  interurban  railways  to  procure  any 
material  portion  of  the  available  business. 

The  point  may  be  raised  that  electric  inter- 
urban railways  serving  large  cities  qualify  for 
a  general  freight  traffic  in  the  sense  that  they 
have  both  the  producers  and  consumers  of  bulk 
freight  in  the  territory  served  by  them.  This 
is  true,  but  as  electric  interurban  roads  gener- 
ally enter  their  terminals  over  the  city  streets, 
the  producers  and  consumers  of  bulk  freight 
can  be  served  by  them  only  through  the  me- 
dium of  transfer  wagons.  The  steam  railroads, 
on  the  contrary,  almost  invariably  serve  the 


22     ECONOMICS  OF  INTERURBAN  RAILWAYS 

industries  over  their  own  switch  tracks  and 
thereby  place  the  electric  interurban  railway 
at  a  tremendous  disadvantage. 

On  the  assumption,  however,  that  an  electric 
interurban  railway  has  a  lack  of  destructive 
steam  road  competition  and  such  liberal  fran- 
chises as  will  enable  it  to  engage  in  the  general 
freight  traffic,  still  the  question  of  the  proper 
construction  and  equipment  to  handle  such 
traffic  is  not  a  small  one.  The  movement  of 
trains  of  freight  cars  involves  a  far  more  elabo- 
rate power  system  and  diversity  of  equipment 
than  does  the  movement  of  trains  of  cars  of  one 
or  two  units  handling  merely  passenger,  express 
and  light  freight  traffic.  The  additional  cost 
of  providing  the  necessary  power  appliances 
and  freight  equipment,  together  with  the  handi- 
caps encountered  in  procuring  any  great  vol- 
'ume  of  bulk  freight  traffic,  constitutes  a  barrier 
against  engaging  in  such  traffic  which  very  few 
of  the  electric  interurban  railways  have  at- 
tempted to  surmount.  Some  electric  railways 
have  developed  into  commercial  railways  by 
engaging  in  the  bulk  freight  traffic,  but  they 
are  not  procuring  such  economical  results  as 
will  lend  much  encouragement  to  the  promo- 


OPERATING  REVENUE  23 

tion  of  new  lines  on  the  theory  that  the  freight 
traffic  revenue  can  be  made  a  material  part  of 
the  total  gross  revenue. 

Relation  Existing  between  Operating 
Revenue  and  Population  Served 

ONLY   FROM   SoURCE    I 

In  tracing  out  the  relation  between  the  popu- 
lation served  and  operating  revenue,  we  shall 
discuss  first  the  case  of  electric  interurban  rail- 
ways having  traffic  movements  arising  from 
Source  I,  or  from  a  primary  terminal  and  inter- 
mediate town  and  village  population  but  no 
secondary  terminal.  The  following  table  has 
been  compiled  from  cases  indiscriminately 
selected  from  normal  roads  of  this  class  serving 
normal  territories: 


24     ECONOMICS  OF  INTERURBAN  RAILWAYS 


TABLE    II.— SHOWING    STATISTICS  OF  GROSS  OPERATING 

REVENUE  OF  TYPICAL  LINES  WITH  A  "PRIMARY" 

TERMINAL  AND  INTERMEDIATE  POPULATION, 

BUT  NO  " SECONDARY "  TERMINAL 


Case       Location 


Miles 

of 
track 


Inter- 

Primary 

mediate 

terminal 

town  and 

popula- 

village 

tion 

popula- 

tion 

Gross 
oper- 
ating 
revenue 


1 
2 
3 
4 
5 
6 
7 
8 
9 
0 
1 
2 
3 
4 
5 
6 
7 
8 
9 
(20 
(21 
(22 
(23 
(24 
(25 
(26 


Iowa 

Michigan 

Missouri 

New  Jersey .  .  . 
New  Jersey .  .  . 
New  Jersey .  .  . 
New  York .  .  .  . 
New  York .  .  .  . 
New  York .  .  .  . 
West  Virginia . 
Connecticut. .  , 
Connecticut. .  , 
Connecticut. . , 

Oklahoma 

Illinois 

Illinois 

Illinois 

Illinois 

lUinois 

Indiana 

Indiana 

Indiana 

Indiana 

Ohio 

Ohio 

Ohio 


76 
16 
22 
18 
15 
17 

17.6 
16.5 
12.5 
19.3 
13 
50 
11 
17 
11 
19 

12.5 
14 
7 
32 
23 
31 
25 
25.5 
24 
53 


86,368 

13,194 

248,341 

44,461 

8,336 
13,298 
11,504 
37,176 

6,420 
41,641 
13,502 
133,605 
19,659 
13,000 
14,548 

6,090 
22,789 
11,456 

8,102 
24,005 
63,933 
19,359 
69,647 
18,266 

5,222 
364,403 


12,071 
5,811 
3,633 
5,506 
8,173 

11,223 
4,040 
5,458 
8,651 
4,589 
7,882 
9,517 
6,213 
6,312 
4,055 
3,191 
2,700 
5,884 
3,926 

13,053 
4,671 
9,701 
8,300 

10,330 
2,227 

10,068 


$140,120 
64,839 
88,889 
92,146 
59,317 
99,346 
75,023 
64,958 
77,215 

105,394 
96,869 
52,379 
46,732 
66,750 
41,776 
25,516 
29,585 
54,300 
29,175 

111,048 
70,618 
99,200 

109,851- 

121,109 
29,000 

104,000 


OPERATING  REVENUE 


25 


TABLE  II  (Continued) 


Case       Location 


Inter- 

Primary 

mediate 

terminal 

town  and 

popula- 

village 

tion 

popula- 

tion 

Gross 
oper- 
ating 
revenue 


(27)  Ohio 

(28)  Ohio 

(29)  Ohio 

(30)  Ohio 

(31)  Pennsylvania. . 

(32)  Pennsylvania. . 

(33)  Pennsylvania. . 

(34)  Pennsylvania.. 

(35)  Pennsylvania. . 

(36)  Massachusetts 


20,387 

14,986 

46,921 

10,136 

9,076 

1,855 

116,577 

10,034 

12,623 

4,788 

5,749 

8,073 

1,556,231 

10,223 

87,411 

5,088 

5,474 

1,640 

6,740 

11,794 

$142,000 
72,984 
20,800 

106,656 
46,376 
91,347 

108,186 
58,430 
13,703 
58,435 


The  above  statistics  indicate: 

(1)  That  the  length  of  the  road  and  the 
amount  of  the  operating  revenue  have  no  di- 
rect relation  with  each  other  from  which  ana- 
lytical deductions  can  be  drawn; 

(2)  That  the  size  of  the  primary  terminal  has 
no  material  influence  upon  the  amount  of  oper- 
ating revenue;  and 

(3)  That  approximately  the  operating  reve- 
nue varies  directly  with  the  aggregate  of  the 
intermediate  town  and  village  population. 
This  is  graphically  set  forth  by  the  chart  on 
page  26. 


26     ECONOMICS  OF  INTERURBAN  RAILWAYS 


190000 
180000 
170000 
160000 
160000 
140000 

a  130000 
S 

^ 120000 
Q 

^ 1 10000 

1 100000 

a 

<   90000 


I 

e 

a 

I 


80000 
70000 
60000 
SOOOO 
40000 
30000 
20000 
10000 


/ 

A/ 

/ 

^ 

/^7 

(^ 

■•^J 

t> 

/ 

1 

-4 

>/ 

4 

A^ 

1^ 

©y 

® 

4/ 

¥/ 

/'-V'* 

© 

4 

yfy 

(2^ 

'    .e^.r 

0 

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w 

-4 

© 

^ 

( 

Ri 

2' 

^  ^ 

W 

■y^ 

j/^ 

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// 

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OO  o> 


—  CM  CO  ^  "5 


Intermediate  Town  and  Village  Population 


OPERATING  REVENUE  27 

By  reference  to  this  chart  it  will  be  noted 
that  out  of  the  tliirty-six  roads  tabulated 
twenty-one  are  within  the  limits  of  the  lines 
representing  an  earnitig  per  capita  of  inter- 
mediate town  and  village  population  of  between 
$8  and  $12,  and  that  all  but  seven  of  these 
cases  are  within  the  limits  of  the  lines  repre- 
senting an  earning  per  capita  of  town  and  vil- 
lage population  of  between  $7  and  $13.  It  will 
furthermore  be  noticed  that  the  relation  be- 
tween the  average  earnings  of  the  thirty-six 
cases  cited  and  the  town  and  village  popula- 
tion is  approximately  represented  by  the  line 
indicating  $10  per  capita  of  intermediate  town 
and  village  population. 

Attention  is  again  directed  to  the  fact  that 
the  above  deductions  are  made  from  the  opera- 
tions of  normal  roads  serving  normal  territory, 
and  therefore  they  will  be  very  misleading  if 
applied  to  abnormal  lines  or  abnormal  ter- 
ritories. It  is  not  intended,  however,  to  imply 
that  a  normal  electric  interurban  railway  serv- 
ing a  normal  territory  that  is  productive  of 
revenue  from  only  Source  I  will  earn  $7,  or  $10, 
or  $13  per  capita  of  intermediate  town  and 
village  population;  indeed,  the  fact  that  these 


28     ECONOMICS  OF  INTERURBAN  RAILWAYS 

limits  are  sometimes  exceeded  is  clearly  indi- 
cated in  the  chart.  It  is  clearly  shown,  how- 
ever, that  the  earnings,  in  all  probabihty,  will 
vary  between  S7  and  $13  per  capita  of  inter- 
mediate town  and  village  population  and  that 
the  general  average  is  approximately  $10  per 
capita  of  that  population. 

Statistics  of  Revenue  of  Lines  Productive 
OF  Earnings  from  Sources  I  and  II 

Table  II  and  the  discussion  of  it  have  served 
to  show  the  relation  between  population  and 
revenue  for  electric  interurban  railways  de- 
riving earnings  from  Source  I  only.  We  shall 
now  consider  a  combination  of  Source  I  and 
Source  II  and  statistics  assembled  for  railways 
having  a  primary  terminal,  one  or  more  sec- 
ondary terminals  and  an  intermediate  town 
and  village  population.  The  cases  in  Table  III 
have  also  been  indiscriminately  selected  from 
normal  roads  serving  normal  territories. 


OPERATING  REVENUE 


29 


TABLE  III.— SHOWING  STATISTICS  OF  TYPICAL  LINES 
WITH    A    PRIMARY    TERMINAL,   ONE  OR  MORE 
SECONDARY    TERMINALS    AND    AN  INTER- 
MEDIATE TOWN  AND  VILLAGE 
POPULATION 


Case 


Miles 

of 
track 


Primary 
terminal 
popula- 
tion 


Second- 
ary 
terminal 
popula- 
tion 


Inter- 
mediate 
town  and 
village 
popula- 
tion 


Gross 
operat- 
ing 
revenue 


(1).. 

.   28.5 

(2).. 

.   32 

(3).. 

.  130 

(4).. 

.   93 

(5).. 

.   40 

(6).. 

.  320 

(7).. 

65 

(8).. 

.   39 

(9).. 

41 

(10) .  . 

32 

(11).. 

82 

(12).. 

199.5 

(13).. 

67 

(14).. 

36.4 

(15) .  . 

26 

(16) .  . 

222 

(17).. 

150 

(18) .  . 

122 

(19) .  . 

95 

(20) .  . 

.   40 

(21) .  . 

40 

20,367 

8,696 

2,723 

25,976 

7,353 

3,150 

2,185,283 

55,783 

35,400 

233,650 

20,081 

26,879 

19,359 

17,010 

2,700 

233,650 

62,650 

112,097 

63,933 

37,655 

7,642 

12,687 

10,480 

5,439 

223,928 

6,305 

4,625 

8,981 

13,650 

7,364 

31,297 

11,080 

1,695 

423,715 

31,770 

14,711 

74,419 

9,491 

12,443 

50,217 

24,026 

4,892 

18,266 

5,501 

6,582 

560,663 

49,651 

74,146 

560,663 

228,194 

36,023 

704,428 

51,678 

39,006 

31,140 

38,189 

13,163 

66,950 

25,768 

2,477 

51,678 

31,140 

4,853 

$84,522 
118,000 

1,210,170 
428,456 
152,535 

1,899,706 
257,868 
135,748 
123,863 
306,962 
91,219 
858,135 
207,150 
222,110 
118,292 

1,068,219 

1,009,638 
664,607 
420,690 
235,665 
247,663 


It  will  be  remembered  that  the  general  con- 
clusion derived  from  Table  II  was  that  the 


30     ECONOMICS  OF  INTERURBAN  RAILWAYS 

approximate  general  average  of  operating  reve- 
nue for  lines  deriving  their  traffic  only  from 
Source  I  was  SIO  per  capita  of  intermediate 
town  and  village  population.  Using  this  ap- 
proximate figure  as  a  basis  for  an  estimate  of 
earnings  from  Source  I  in  Table  III,  we  can  by 
subtraction  arrive  at  the  portion  of  earnings 
attributable  to  Source  II  in  Table  III.  The 
last  column  in  Table  IV,  therefore,  shows  the 
per  capita  revenue  of  secondary  terminal  popu- 
lation. The  average  distance  between  termi- 
nals is  also  included 

The  statistics  in  Table  IV  indicate: 

(1)  That  the  length  of  road  has  in  this  case, 
as  in  the  previous  case,  no  relative  bearing 
(from  which  any  conclusions  can  be  drawn)  on 
the  amount  of  operating  revenue  from  Source  II ; 

(2)  That  the  operating  revenue  from  Source 
II  is  not  governed  by  the  population  of  the  pri- 
mary terminal;  and 

(3)  That  the  relations  existing  between  reve- 
nue from  Source  I  and  the  intermediate  town 
and  village  population,  heretofore  shown,  do 
not  exist  between  the  revenue  from  Source  II 
and  the  intermediate  town  and  village  popu- 
lation. 


OPERATING  REVENUE 


31 


TABLE    IV.— SHOWING    STATISTICS    OF  ROADS  LISTED  IN 

TABLE  III,   BUT  WITH   REVENUES  DIVIDED  INTO 

THOSE    FROM    SOURCE    I   AND  THOSE 

FROM  SOURCE   II 


• 

urce 

sec- 

opu- 

3 

§ 

^^^ 

9   ID 

§ 

a 

a 

^   "^ 

c3  ^ 

> 

<u 

<D 

a  c3  fl 

o 

-4.3 

.2  n 

m 

m 
O 

1 

'^     L_l 

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U 

o  .t^  -a 

O 

bC  -^ 

bC 

c3  M 

cS  <n 

rH   ?i^   ^^ 

s 

2 

J 

•J  s 

3  S 

•^  9 

S  2^  ^-  d 

1^ 

3 

^B 

O 

H 

00  o 

(1)... 

28.5 

28.5 

$84,522 

$27,230 

$57,292 

$6.60 

(2)... 

32 

32 

118,000 

21,500 

86,500 

12.00 

(3)... 

130 

32 

1,210,170 

354,000 

856,170 

15.00 

(4)... 

93 

60 

428,456 

268,790 

159,666 

8.00 

(5)... 

40 

24 

152,535 

27,000 

125,535 

7.35 

(6)... 

320 

50 

1,899,706 

1,120,970 

768,736 

12.30 

(7)... 

65 

65 

257,868 

76,420 

175,448 

4.70 

(8)... 

39 

39 

135,748 

54,390 

81,358 

8.00 

(9)... 

41 

40 

123,863 

46,250 

79,613 

12.30 

(10)... 

32 

32 

306,962 

73,640  232,320 

17.00 

(11)... 

82 

22 

91,219 

16,950  74,269 

6.70 

(12)... 

199.5 

40 

858,135 

147,110  711,025 

22.40 

(13)... 

67 

30 

207,150 

124,430 

82,720 

8.70 

(14)... 

36.4 

15 

222,110 

48,920  171,190 

7.12 

(15)... 

26 

26 

118,292 

65,820  53,532 

9.70 

(16)... 

222 

50 

1,068,219 

741,460  326,759 

6.55 

(17)... 

150 

80 

1,009,638 

360,230  649,408 

2.85 

(18)... 

122 

100 

664,607 

390,006 

274,601 

5.30 

(19) . .  . 

95 

50 

420,690 

131,630 

289,060 

7.60 

(20)... 

40 

40 

235,665 

24,770 

210,895 

8.20- 

(21)... 

40 

40 

247,663 

48,530 

199,133 

6.40 

32     ECONOMICS  OF  INTERURBAN  RAILWAYS 

The  reason  why  the  same  relationship 
does  not  exist  between  the  intermediate  town 
and  village  population  and  the  revenue  derived 
from  Source  I  and  Source  II,  respectively,  is 
obvious.  A  road  operating  between  a  primary 
terminal  and  a  secondary  terminal,  through 
an  intermediate  town  and  village  population, 
will  not  obtain  materially  different  results  in 
so  far  as  they  relate  to  the  earnings  contributed 
by  the  population  of  the  intermediate  towns 
and  villages  than  a  road  serving  merely  a  pri- 
mary terminal  and  an  intermediate  town  and 
village  population.  The  reason  for  this  is  that 
the  average  inhabitant  of  the  intermediate 
towns  and  villages,  if  but  one  terminal  is  avail- 
able to  him,  will  direct  his  attention  to  that 
terminal,  whereas  if  two  terminals  are  avail- 
able he  will  travel  sometimes  to  one  and  some- 
times to  the  other.  Hence  the  sum  total  of 
the  revenue  derived  from  his  patronage  is  ap- 
proximately the  same  in  each  instance ;  conse- 
quently as  the  revenue  from  Source  II  per 
capita  of  intermediate  town  and  village  popu- 
lation increases,  the  revenue  from  Source  I 
per  capita  of  intermediate  town  and  village 
population  decreases,  and  the  approximate  per 


OPERATING  REVENUE  33 

capita  average  of  $10  previously  obtained  is 
affected  accordingly. 

On  the  other  hand,  the  table  discloses  the 
fact  that  the  revenue  from  Source  II  per  capita 
of  secondary  terminal  population  does  not  vary 
so  widely  as  it  seems  to  do  from  a  casual  ex- 
amination of  the  table.  As  the  earnings  from 
Source  II  are  essentially  created  by  the  exist- 
ence of  one  or  more  secondary  terminals,  it  is 
reasonable  that  there  should  exist  some  ap- 
proximate relation  between  the  amount  of  this 
revenue  and  the  entire  population  of  the  sec- 
ondary terminal,  or  secondary  terminals,  served. 
If  the  average  distance  between  terminals  is 
taken  into  consideration,  as  well  as  the  charac- 
ter of  the  terminals,  these  relations  may  be 
readily  brought  out  by  a  study  of  Table  IV, 
and  we  may  sum  them  up  in  the  form  of  two 
general  postulates: 

(1)  The  greater  the  average  distance  be- 
tween terminals  the  less  the  revenue  from 
Source  II  per  capita  of  secondary  terminal 
population. 

That  this  should  be  the  case  is  logical  from 
the  fact  that  electric  interurban  railways  par- 
alleling steam  railroads  will  procure  for  short 


34     ECONOMICS  OF  INTERURBAN  RAILWAYS 

distances,  say  40  miles  or  less,  practically  all  of 
the  passenger  traffic,  owing  to  the  frequency  of 
service  and  the  convenience  of  its  operation  over 
the  city  streets  into  the  heart  of  the  city.  For 
distances  greater  than  40  miles,  the  presumed 
greater  hazard,  discomfort  or  loss  of  running 
time  of  the  electric  lines  as  compared  with  the 
steam  lines  results  in  the  proportion  of  the 
traffic  which  the  electric  lines  procure  being 
gradually  diminished  as  the  distance  increases. 

(2)  The  second  postulate  deduced  from 
Table  IV  has  to  do  with  the  drawing  facilities 
of  the  terminals  rather  than  their  distances 
apart,  and  it  is  to  the  effect  that  the  earnings 
from  Source  II  per  capita  of  secondary  termi- 
nal population  depend  largely  upon  the  causes 
for  intercommunication  between  the  various 
terminals. 

It  is  clear  that  two  comparatively  small  ter- 
minals in  close  proximity,  one  a  county  seat 
and  the  other  a  manufacturing  center,  will 
have  far  greater  intercommunication  than  if 
both  terminals  are  county  seats.  Again  there 
will  be  greater  intercommunication  per  capita 
in  the  case  of  a  very  large  city  connected  with  a 
nearby  substantially  smaller  city  than  in  the 


OPERATING  REVENUE  35 

case  of  one  comparatively  large  terminal, 
sufficient  unto  itself,  connected  by  an  electric 
line  with  another  similar  large  terminal. 

f 

General  Conclusions  Concerning  Reve- 
nue FROM  Source  II 

The  above  postulates  are  fundamental  gen- 
eralizations that  are  easily  discernible.  But  it 
is  very  evident,  however,  that  any  attempt  to 
set  forth  an  approximate  concrete  relation  be- 
tween the  revenue  from  Source  II  and  the 
population  of  the  secondary  terminal  is  an 
extremely  difficult  undertaking.  Neverthe- 
less, the  foregoing  statistics  and  discussions  do 
indicate  the  following  general  tendencies 
governing  revenues  from  Source  II : 

(1)  That  where  the  secondary  terminal  is 
removed  from  the  principal  terminal  a  distance 
of  40  miles  or  less  the  revenue  from  Source  II 
will  vary  between  $6  and  $20  per  capita  of  that 
secondary  terminal  population,  depending  upon 
the  causes  for  intercommunication  and  the  effi- 
ciency of  the  service  rendered;  and 

(2)  That  when  the  secondary  terminal  is 
removed  from  the  principal  terminal  a  dis- 


36     ECONOMICS  OF  INTERURBAN  RAILWAYS 

tance  greater  than  40  miles  the  revenue  from 
Source  II  per  capita  of  that  secondary  terminal 
population  wdll  be  diminished  practically 
10  per  cent,  for  each  10  miles  of  increased 
distance. 

Other   Statistics  Concerning  Revenue 

FROM  Operation,  Showing  Slightness 

OF  Relation  between   Revenue 

AND  Car  Miles  Operated 

The  above  tables  and  discussions  have 
afforded  a  glimpse  of  the  relation  between 
the  population  served  and  the  operating 
revenue  of  electric  interurban  railways.  It 
was  stated  as  a  conclusion  to  Table  II  and 
Table  IV  that  the  length  of  the  road  and  the 
amount  of  operating  revenue  bear  no  direct 
relation  to  each  other  from  which  any  analytical 
deduction  can  be  drawn.  Inasmuch  as  it  is 
customary,  however,  to  use  the  unit  of  car- 
mile  revenue  in  considering  the  revenue  of  rail- 
roads, it  may  be  well  to  present  here  Table  V, 
showing  the  revenue  per  car-mile  for  twenty 
typical  electric  interurban  railways. 

This  table,  with  its  utter  lack  of  uniformity 


OPERATING  REVENUE 


37 


TABLE    v.— SHOWING     REVENUE    PER    CAR    MILE    FOR 
TWENTY  TYPICAL  INTERURBAN  ELECTRIC  RAILWAYS 

Case 

Miles 
of 

track 

Gross 
revenue 

Car 

miles 

operated 

Revenue 

per  car 

mile 

(1) 

41 

17 

20 

25 

32 

51 

38 

46 

23.7 

40 
320 
101 

62 
122 

40 

32 
222 

30 
170 

45 

$123,863 

66,750 

108,186 

141,085 

107,278 

133,240 

149,304 

230,142 

70,618 

145,689 

1,899,706 

546,980 

405,890 

620,568 

234,516 

101,993 

1,068,219 

67,416 

999,274 

355,469 

639,290 

313,498 

572,977 

474,564 

341,542 

558,428 

648,728 

1,052,089 

191,674 

638,987 

5,852,994 

2,294,714 

1,307,924 

2,146,413 

818,425 

341,542 

3,818,028 

367,460 

3,276,608 

923,705 

$0  1954 

(2) 

(3) 

0.2122 
0.1886 

(4) 

0  2975 

(5) 

(6) 

(7) 

0.3111 
0.2385 
0  2301 

(8) 

(9) 

0.2166 
0  3684 

(10) 

(11) 

(12) 

(13) 

0.2284 
0.3081 
0.2383 
0  3103 

(14) 

0  2889 

(15).. 

(16) 

(17) 

(18) 

(19) 

(20) 

0.2865 
0.2986 
0.2965 
0.1985 
0.3083 
0.3826 

in  revenue  per  car  mile,  amply  illustrates  the 
futility  of  attempting  to  estimate  revenue  on 
this  unit  basis  for  electric  interurban  railways. 
The  revenue  per  car  mile  will  naturally  be 
dependent  upon  the  frequency  of  service, 
which,  on  the  other  hand,  depends  upon  the 
judgment  of  the  management  and  also  upon 


38     ECONOMICS  OF  INTERURBAN  RAILWAYS 

the  demands  of  local  conditions.  Further- 
more, the  question  of  multiple-unit  operation 
enters  into  the  subject  of  average  earnings 
per  car  mile,  as  does  also  the  question  as  to 
whether  the  traffic  is  balanced,  that  is  to  say, 
the  extent  of  the  equality  of  movement  in 
opposite  directions. 

COMPAKISON    OF    ElECTRIC    InTERURBAN    AND 

Steam  Railway  Revenues 

The  average  gross  revenue  per  mile  of  line 
on  243,229  miles  of  steam  railroads  in  1911, 
according  to  the  statistics  of  the  Interstate 
Commerce  Commission,  was  $11,589,  of  which 
S2708  was  derived  from  passenger  trafiic. 
Similar  statistics  for  electric  interurban  rail- 
ways are  not  available,  but  from  the  records 
of  the  typical  cases  listed  in  Table  V,  which 
may  be  said  to  be  representative  of  all  roads 
qualifying  as  electric  interurban  railways  under 
the  definition  hereinbefore  given,  the  average 
gross  revenue  per  mile  of  line  is  $5130. 

While  these  figures  are  interesting  from  the 
view-point  of  disclosing  the  relative  earning 
power  of  steam  railroads  and  electric  in- 
terurban railways,  they  are   of  little  impor- 


OPERATING  REVENUE  39 

tance  on  account  of  the  different  conditions 
prevailing  in  the  two  fields.  The  electric 
interurban  railways,  deriving  substantially  all 
of  their  revenue  from  passenger  traffic  sources, 
are  limited  to  sections  of  dense  population 
where  large  passenger  traffic  exists.  Steam 
roads,  deriving  a  large  percentage  of  their 
revenue  from  freight  sources,  are  not  limited 
to  such  restricted  areas  and  have  been  located 
more  especially  for  the  primary  purpose  of 
developing  freight  traffic.  Therefore,  that  the 
earnings  of  the  electric  interurban  railways 
should  be  considerably  higher  than  the  pas- 
senger revenue  of  steam  roads  and  consid- 
erably less  than  the  gross  revenue  of  steam 
roads  is  but  a  logical  result. 

The  chart  on  the  next  page  graphically  dis- 
closes the  growth  of  the  average  revenue  and 
operating  expense  per  mile  of  line  per  year  of 
the  steam  railroads  as  compared  to  that  of  the 
electric  interurban  railways.  The  statistics 
of  the  steam  lines  are  again  taken  from  the 
report  of  the  Interstate  Commerce  Commis- 
sion, while  those  of  the  electric  interurban 
railways  have  been  gathered  from  the  oper- 
ating statements  of  a  number  of  typical  lines. 


40     ECONOMICS  OF  INTERURBAN  RAILWAYS 


Year 


r>*  oo 


0>  O  O  03 


OPERATING  REVENUE  41 

From  this  chart  it  is  obvious  that  the  growth 
of  revenue  per  mile  of  line  on  electric  inter- 
urban  railways  is  not  keeping  pace  with  that 
of  steam  railroads.  It' appears  also  that  the 
operating  expense  per  mile  of  line  on  the 
steam  railroads  has  not  increased  as  rapidly 
as  the  revenue  on  these  Unes.  This  has 
resulted  in  a  gradual  increase  in  the  net  revenue 
per  mile  of  line  derived  from  steam  railroad 
operation.  The  growth  of  operating  expense 
on  electric  interurban  railways,  however,  has 
substantially  kept  pace  with  the  growth  of 
revenue  per  mile  of  hne,  with  the  result  that 
the  increase  of  net  revenue  per  mile  of  line 
on  electric  railways  has  been  very  little  and 
was  less  in  1911  than  in  1910. 

One  of  the  characteristics  of  electric  interur- 
ban railways,  the  mileage  of  which  has  not 
been  extended  from  time  to  time,  is  that  the 
available  revenue  was  quickly  developed  and 
that  at  the  end  of  this  period  the  revenue  has 
increased  at  a  very  low  rate.  This  is  not 
especially  revealed  by  the  chart  on  page  40, 
owing  to  the  influence  which  the  constantly 
increasing  mileage  has  had  on  the  revenue  of 
the  cases  used  in  preparing  the  chart. 


42    economics  of  interurban  railways 

Conclusion 

The  generally  accepted,  and  doubtless  the 
best,  method  of  determining  the  probable 
revenue  of  a  projected  line  is  to  apply  to  deter- 
minable units  of  population  of  the  projected 
line  the  known  unit  results  obtained  by  operat- 
ing roads  whose  type  of  construction  and 
method  of  operation  and  the  general  character- 
istics of  whose  territory  are  in  all  respects 
similar  to  and  comparable  with  homologous 
attributes  of  the  projected  road.  In  using 
already  existing  roads  to  determine  the  feasi- 
bility of  a  projected  line,  however,  care  must 
be  exercised  in  determining  the  equality  of 
conditions  and  in  making  corrections  to  com- 
pensate for  differences  productive  of  change  in 
the  revenue  results.  In  view  of  previous 
discussion  as  to  the  relation  between  operating 
revenue  and  the  population  of  the  territory 
served,  it  is  obvious,  too,  that  careful  considera- 
tion must  be  given  to  the  distribution  of  the 
population  as  well  as  to  the  amount  thereof. 

The  greatest  point  of  interest  in  the  con- 
templated establishment  of  an  electric  interur- 
ban  railway  is,  of  course,  the  probable  revenue. 


OPERATING  REVENUE  43 

The  final  determination  of  this  should  in  gen- 
eral be  left  to  those  who  have  expert  knowledge 
of  such  matters  and  whose  judgment  and  dis- 
criminating discernment  of  the  valuation  of 
varying  elements  affecting  revenue  is  of  the 
highest  character.  It  is  possible,  however,  for 
the  layman  by  an  intelligent  application  of  the 
rules  governing  the  approximate  relations 
existing  between  the  revenue  and  the  popula- 
tion served,  as  heretofore  established,  to  deter- 
mine, within  reasonable  limits,  the  probable 
revenue  that  normal  interurban  railways  can 
obtain  in  normal  territories,  and  in  this  way 
to  determine  approximately  whether  the  pro- 
jected line  is  fundamentally  good  or  funda- 
mentally bad  from  the  point  of  view  of  the 
investor. 


CHAPTER  IV 

OPERATING  EXPENSE 

THE  classification  of  operating  expenses  of 
electric  railways,  as  prescribed  by  the 
Interstate  Commerce  Commission  in  Section 
20  of  an  act  to  regulate  commerce,  is  as 
follows : 
General  accounts: 

I.  Way  and  structures. 
II.  Equipment. 

III.  Traffic. 

IV.  Conducting  transportation. 
V.  General  and  miscellaneous. 

Each  of  these  headings  is  subdivided  into 
many  primary  accounts,  but  for  the  sake  of 
clearness  each  group  of  subdivisions  will  be 
taken  up  separately  in  the  order  of  the  general 
headings  given  above. 

Way  and  Structures 

The  first  general  account,  way  and  struc- 
tures, is  detailed  by  the  Interstate  Commerce 
Commission  in  the  following  manner: 

44 


OPERATING  EXPENSE  43 


Primary  accounts: 

(1)  Superintendence  of  way  and  structures. 

Maintenance  of  way: 

Maintenance  pi  roadway  and  track: 

(2) 

Ballast. 

(3) 

Ties. 

(4) 

Rails. 

(5) 

Rail  fastenings  and  joints. 

(6) 

Special  work. 

(7) 

Underground  construction. 

(8) 

Roadway  and  track  labor. 

(9) 

Paving. 

(10) 

Miscellaneous  roadway  and   track 

expenses. 

(11) 

Cleaning  and  sanding  tracks. 

(12) 

Removal  of  snow,  ice  and  sand. 

Other  maintenance  of  way: 

(13) 

Tunnels. 

(14) 

Elevated  structures  and  foundations. 

(15) 

Bridges,  trestles  and  culverts. 

(16) 

Crossings,  fences,  cattle  guards  and 

signs. 

(17) 

Signal  and  interlocking  systems. 

(18) 

Telephone  and  telegraph  systems. 

(19) 

Other  miscellaneous  way  expenses. 

46     ECONOMICS  OF  INTERURBAN  RAILWAYS 

Maintenance  of  electric  lines: 

(20)  Poles  and  fixtures. 

(21)  Underground  conduits. 

(22)  •   Transmission  system. 

(23)  Distribution  system. 

(24)  Miscellaneous  electric  line  expenses. 

(25)  Buildings  and  structures. 

(26)  Depreciation  of  way  and  structures. 

(27)  Other  operations — Dr. 

(28)  Other  operations — Cr. 

Statistics  of  Actual  Operating  Expense 

FOR  Wat  and  Structures  on  Typical 

Electric  Interurban  Railways 

Before  several  of  these  primary  accounts 
are  taken  up  in  detail  it  may  be  interesting  to 
ascertain  whether  any  consistency  exists  in 
the  operating  expense  for  way  and  struc- 
tures on  various  electric  interurban  lines. 
Table  I  has  been  compiled  at  random  from 
typical  roads  now  in  operation: 


OPERATING  EXPENSE 


47 


TABLE  I. — SHOWING  STATISTICS  OF  ACTUAL  OPERATING 

EXPENSE  FOR  WAY  AND  STRUCTURES  ON  TEN 

TYPICAL  ELECTRIC  INTERURBAN  RAILWAYS 


Case 


Miles 

of 
track 


Expense 

per  mile 

of  track 

per  annum 


(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

(10) 

Average  in  above  cases 

Average  on  243,229  miles  of 
steam  road  in  1911,  per  mile 
of  line.^  > 


52 
128 

83 
180 

45 
170 
222 

67 
122 

46 


$999 
558 
794 
430 
774 
474 
519 
760 
426 
661 
555 

1,519 


The  above  statistics  clearly  bring  out  two 
points.  In  the  first  place,  such  a  great  varia- 
tion in  operating  expense  for  way  and  struc- 
tures as  is  shown  by  the  typical  roads  cited 
is  quite  conclusive  proof  that  we  need  look 
no  farther  for  consistency  in  this  item  of 
expense.     But   the   second   point,    one   more 

'  The  statistics  for  the  steam  roads  in  this  and  the  following  tables 
are  per  mile  of  line  and  not  per  mile  of  track.  In  the  comparisons  it  is 
therefore  necessary  to  make  due  allowance  for  such  portions  of  the 
steam  railway  mileage  as  are  equipped  with  more  than  one  main 
track. 


48     ECONOMICS  OF  INTERURBAN  RAILWAYS 

surprising,  is  the  very  great  comparative  differ- 
ence between  the  average  expense  per  mile 
of  track  per  annum  on  electric  interurban 
railways  and  the  similar  expense  on  steam 
roads.  While  it  is  obvious  that  a  steam- 
operated  road,  moving  a  great  volume  of 
heavy  traffic,  requires  a  greater  expenditure 
of  money  to  maintain  its  way  and  structures 
than  does  an  electric  road  with  its  lighter 
equipment  and  a  greatly  reduced  number  of 
car-mile  movements,  still  it  does  not  seem 
logical  that  there  should  be  so  great  a  difference. 
The  fact  is  that  electric  interurban  railways 
are  undoubtedly  making  less  outlay  than 
necessary  for  way  and  structures  rather  than 
that  the  railroads  are  making  more  than  is 
necessary.  The  average  age  of  the  existing 
electric  interurban  lines  is  only  about  five  or 
six  years,  and  a  sufficiently  high  standard  of 
maintenance  under  such  a  condition  has  not 
been  generally  adopted.  It  is  quite  probable 
that  even  the  minimum  expenditure  for  way 
and  structures  on  normal  electric  interurban 
railways  under  average  conditions  is  con- 
siderably higher  than  the  average  amount  in 
Table  I. 


OPERATING  EXPENSE  49 

Most  Important  Primary  Accounts  under 
Way  and  Structures 

If  it  is  true,  as  intimated  in  the  preceding 
paragraph,  that  electric  interurban  railways 
on  the  average  are  paying  less  than  is  advisable 
for  way  and  structures,  a  closer  examination 
into  what  ought  to  be  the  limits  of  expendi- 
ture under  such  a  heading  for  average  normal 
conditions  would  be  of  value  at  this  point. 

The  various  primary  accounts  outlined  by 
the  Interstate  Commerce  Commission  under 
the  general  account,  way  and  structures,  do 
not  all  rank  equally  in  importance  so  far  as 
the  aggregate  amount  of  this  account  is  con- 
cerned. The  expenses  of  superintendence  and 
depreciation  are  less  than  that  of  maintenance, 
and  the  items  constituting  the  bulk  of  the  to- 
tal maintenance  cost  on  average  lines  are  as 
follows:  ties;  roadway  and  track  labor;  bridges, 
trestles  and  culverts,  and  sundry  items  con- 
stituting maintenance  of  electric  lines. 

It  is  obviously  impossible  to  lay  down  the 
exact  amounts  for  these  several  expenses,  but 
as  a  result  of  careful  study  a  statement  of  figures 
can  be  made  that  undoubtedly  approximate 


50     ECONOMICS  OF  INTERURBAN  RAILWAYS 

the  average  for  normal  electric  interurban 
railways  serving  normal  territories. 

The  average  line  has  2600  ties  per  mile  and 
the  average  life  of  these  ties  is  ten  years. 
Thus  an  average  of  260  ties  per  mile  of  track 
per  year  must  be  renewed,  which  at  an  average 
of  70  cents  per  tie  is  equivalent  to  $182  per 
mile  of  track  per  year. 

On  an  estimate,  under  average  conditions, 
of  two  men  and  a  foreman  to  a  section  of  6 
miles,  the  least  cost  of  roadway  and  track 
labor  per  mile  of  track  per  year  is  approxi- 
mately $250. 

The  item  of  maintenance  of  bridges,  trestles 
and  culverts  will  naturally  vary  a  great  deal 
on  different  roads  but  will  average  at  least  $50 
per  mile  of  track  per  year. 

Sundry  items  constituting  maintenance  of 
electric  lines,  including  also  the  maintenance 
of  telegraph  and  telephone  lines,  will  average 
at  least  $100  per  mile  of  track  per  year. 

Although  the  allowance  for  depreciation  is 
less  than  that  for  maintenance,  still  it  forms 
an  item  of  considerable  size.  If  we  proceed 
on  the  assumption  that  twenty  years'  use  of 
rail  will  reduce  its  value  from  the  cost  of  new 


OPERATING  EXPENSE  51 

rail  to  the  cost  of  relayer,  then  one-twentieth 
of  $10  per  ton  will  represent  the  approximate 
amount  to  be  set  aside  to  cover  the  deprecia- 
tion of  the  rail.  The  average  electric  road 
uses  rail  weighing  approximately  100  tons  to 
the  mile,  which  then  would  be  equivalent  to  a 
yearly  depreciation  of  $50  per  mile  for  rail 
only.  If  this  is  added  to  the  probable  depre- 
ciation of  bridges  and  other  structures,  at 
least  $100  per  mile  of  track  per  year  will  be 
required  for  this  expense. 

The  sum  of  the  above-estimated  amounts 
is  $682  per  mile  of  track  per  year,  which,  as 
we  said  before,  constitutes  the  bulk  of  the 
total  cost  of  way  and  structures  on  the  average 
electric  interurban  line.  An  estimate  of  $150 
per  mile  of  track  for  all  other  items  not  specif- 
ically enumerated  above,  including  superintend- 
ence, is  a  very  low  minimum,  which  makes  the 
least  total  cost  logical  and  reasonable  for  way 
and  structures  $832  per  mile  of  track  per  year. 

The  result  of  our  examination,  therefore, 
has  indicated  the  fact  that  the  average  mini- 
mum expenditure  for  way  and  structures  on 
normal  electric  interurban  railways,  approxi- 
mately set  at  $832  per  mile  of  track  per  year, 


52     ECONOMICS  OF  INTERURBAN  RAILWAYS 

is  considerably  above  the  average  of  S555  for 
the  typical  Hnes  cited  in  Table  I.  Moreover, 
it  is  only  about  one-half  of  the  similar  expense 
on  steam  railroads.  This  estimate,  be  it 
understood,  is  by  no  means  radical.  It  would 
seem,  therefore,  that,  on  the  basis  of  the 
information  in  Table  I  and  the  above  approxi- 
mate figures,  definite  conclusions  might  be 
drawn  in  regard  to  the  outlay  for  way  and 
structures  on  electric  interurban  lines,  and 
the  two  that  appear  to  sum  up  the  case  best 
are  these: 

(1)  That  electric  interurban  railways  are 
not  now  bearing  the  burden  of  operating  costs 
under  the  heading  of  way  and  structures  that 
they  will  ultimately  have  to  bear;  and 

(2)  That  the  actual  expense  of  way  and 
structures  on  the  average  electric  road  will 
vary  between  $800  and  $1000  per  mile  of 
track  per  year. 

Equipment 

The  first  general  account  for  electric  interur- 
ban railways  under  the  Interstate  Commerce 
Commission  system,  that  of  way  and  struc- 
tures, having  been  disposed  of,  we  may  next 


OPERATING  EXPENSE  53 

turn  our  attention  to  the  one  following,  or  the 
equipment    account.     This   is  subdivided    as 
follows : 
Primary  accounts: 

(29)  Superintendence  of  equipment. 

Maintenance  of  power  equipment: 

(30)  Power-plant  equipment. 

(31)  Substation  equipment. 
Maintenance  of  cars  and  locomotives: 

(32)  Passenger  and  combination  cars. 

(33)  Freight,  express  and  mail  cars. 

(34)  Locomotives. 

(35)  Service  cars. 

Maintenance  of  electric  equipment  of 
cars  and  locomotives : 

(36)  Electric  equipment  of  cars. 

(37)  Electric  equipment  of  locomotives. 
Miscellaneous  equipment  expenses: 

(38)  Shop  machinery  and  tools. 

(39)  Shop  expenses. 

(40)  Horses  and  vehicles. 

(41)  Other   miscellaneous    equipment    ex- 

penses : 

(42)  Depreciation  of  equipment. 

(43)  Other  operations — Dr. 

(44)  Other  operations — Cr. 


54     ECONOMICS  OF  INTERURBAN  RAILWAYS 

Statistics  of  Actual  Opekating  Expense 

FOR    Equipment  on    Typical  Electric 

Interurban  Railways 

The  statistics  in  Table  II  have  been  pre- 
pared from  ten  cases  indiscriminately  selected 
from  normal  electric  interurban  railways  serv- 
ing normal  territories : 


TABLE    II.— GIVING    ACTUAL    OPERATING    EXPENSE  FOR 

EQUIPMENT  ON  TEN  TYPICAL  ELECTRIC 

INTERURBAN  RAILWAYS 


Case 


Car  miles 
operated 
per  mile 
of  track 
per  year 


Expense 

per  car 

mile 


Expense 
per  mile 
of  track 
per  year 


(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

(10) 

Average , 

Average  on  243,229 
miles  of  steam  road  in 
1911,  per  mile  of  line 


33,756 
41,066 
25,478 
22,149 
20,527 
19,274 
15,856 
21,095 
18,593 
20,460 


22,490 


SO. 0210 
0.0193 
0.0224 
0.0233 
0.0232 
0.0209 
0.0225 
0.0203 
0.0202 
0.0285 


1.0212 


$699 
790 
667 
471 
476 
402 
357 
428 
379 
582 


$482 
1,775 


OPERATING  EXPENSE  55 

The  statistics  of  the  expense  covered  by  the 
equipment  account  of  steam  roads,  as  indicated 
by  the  above  table,  are  in  no  wise  comparable 
to  those  of  electric  interurban  railways,  and 
the  comparison  serves  only  to  show  the  approxi- 
mate relation  existing  between  them. 

The  statistics  in  regard  to  electric  interur- 
ban hues  indicate  that  2  cents  per  car  mile  is 
the  minimum  expense  for  equipment  and  3 
cents  per  car  mile  is  the  maximum.  The 
expense  per  car  mile  will,  of  course,  depend 
largely  on  the  number  of  car  mile  movements. 
The  ordinary  electric  interurban  railway, 
rendering  an  hourly  passenger  service  for  the 
greater  part  of  nineteen  hours  per  day,  with 
its  additional  movements  in  the  way  of  trail 
cars,  express,  mail,  freight  and  work  cars,  will 
operate  between  15,000  and  20,000  car  miles 
per  mile  of  track  per  year.  The  result  for 
roads  rendering  half-hourly  service  is  approxi- 
mately double  that. 

Maintenance  and  Depreciation  of 
Equipment 

The  expenses  for  maintenance  of  way  and 
structures  and  for  maintenance  of  equipment 


56     ECONOMICS  OF  INTERURBAN  RAILWAYS 

on  electric  interurban  railways  vary  consider- 
ably in  amount.  The  maximum  expense  of 
maintaining  equipment  in  operative  condi- 
tion is  reached  in  a  year  or  two  after  the  equip- 
ment is  put  in  service.  Therefore  well- 
managed  lines  are  now  bearing  approximately 
the  maximum  burden  of  expense  of  maintaining 
equipment,  while  on  the  other  hand,  as  stated 
before,  a  high  standard  of  maintenance  of  way 
and  structures  has  not  been  widely  adopted. 

This  is  not  the  only  difference  that  exists 
between  the  two  general  accounts,  however, 
for  the  amount  per  mile  of  track  that  must  be 
set  aside  for  depreciation  of  equipment  exceeds 
that  necessary  for  depreciation  of  way  and 
structures.  The  question  of  adequate  deprecia- 
tion for  equipment,  however,  is  at  the  present 
time  receiving  more  serious  consideration. 
In  general  a  passenger  motor  car,  costing 
approximately  $10,000,  will  operate  on  an 
average  about  50,000  miles  a  year.  On  the 
assumption  that  such  a  motor  car  after  operat- 
ing twenty  years  will  have  depreciated  to 
one-third  of  its  original  value,  then  the  annual 
depreciation  will  be  approximately  3  1/2  per 
cent.,  or  $350  per  year,  which  is  equivalent  to 


OPERATING  EXPENSE  57 

seven-tenths  of  a  cent  per  car  mile.  When 
this  amount  of  depreciation  is  considered  in 
connection  with  the  minimum  expense  of  2 
cents  per  car  mile  derived  from  Table  II,  it  is 
evident  that  we  are  safe  in  drawing  this  con- 
clusion— that  the  average  expense  in  connec- 
tion with  equipment,  if  proper  provision  is 
made  for  depreciation,  is  approximately  3 
cents  per  car  mile,  which  is  equivalent  in  the 
case  of  the  basic  hourly  service  to  from  $450 
to  $600  per  mile  of  track  per  year. 

Traffic 

The  schedule  of  primary  accounts  under  the 
third  general  heading  of  traffic  is  as  follows : 
Traffic  expenses: 

(45)  Superintendence  and  solicitation. 

(46)  Advertising. 

(47)  Miscellaneous  traffic  expenses. 

Statistics  for  Actual  Operating  Expense 

FOR  Traffic  on  Typical  Electric 

Interurban  Railways 

Table  III  has  been  compiled  from  ten  cases 
indiscriminately  selected  from  normal  electric 
interurban  roads  serving  normal  territories : 


58     ECONOMICS  OF  INTERURBAN  RAILWAYS 


TABLE  III.— SHOWING  ACTUAL  OPERATING  EXPENSE  FOR 

TRAFFIC  ON  TYPICAL  ELECTRIC  INTERURBAN 

RAILWAYS 


Case 


Cost  per  mile 

of  track 

per  annum 


(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

(10) 

Average 

Average  on  243,229  miles  of  steam  road  in 
1911,  per  mile  of  line 


$10 
46 
38 
64 
53 
61 
20 
89 

114 
94 
48 

234 


The  above  statistics  indicate  that  as  yet 
electric  interurban  railways  have  not  employed 
extensive  organizations  for  the  purpose  of 
developing  traffic.  As  the  electric  interurban 
railway  develops  into  a  commercial  electric 
railway  the  traffic  expense  will  be  increased. 
The  question  of  the  proper  extent  of  such  an 
organization,  from  an  economic  point  of  view, 
depends  much  on  local  conditions,  but,  speak- 
ing generally,  we  may  say  that  electric  inter- 
urban railways  should  maintain  more  extensive 


OPERATING  EXPENSE  59 

departments  for  the    development   of   traffic 
than  is  now  the  practice. 

In  so  far  as  it  is  possible  to  make  deductions 
from  the  limited  figures  available  in  the  traffic 
expense  field,  it  seems  that  an  electric  inter- 
urban  railway  should  expend  from  $50  to  $150 
per  mile  of  track  per  year  for  the  purpose  of 
maintaining  an  active  traffic  organization  to 
secure  the  available  business  as  rapidly  as 
possible. 

Conducting  Transportation 

Continuing  our  analysis  of  the  general 
accounts  prescribed  by  the  Interstate  Com- 
merce Commission  for  electric  interurban  rail- 
roads, we  find  that  the  fourth  heading,  that 
of  conducting  transportation  is  subdivided  as 
follows : 
Primary  accounts: 

(48)  Superintendence  of  transportation. 

GROUP  I — POWER 

(49)  Power-plant  employees. 

(50)  Substation  employees. 


60     ECONOMICS  OF  INTERURBAN  RAILWAYS 

(51)  Fuel  for  power. 

Other  power  supplies  and  expenses : 

(52)  Water  for  power. 

(53)  Lubricants  for  power. 

(54)  Miscellaneous    power-plant    supplies 

and  expenses. 

(55)  Substation  supplies  and  expenses. 

(56)  Power  purchased. 

(57)  Power  exchanged — balance. 

(58)  Other  operations — Dr. 

(59)  Other  operations — Cr. 

GROUP  II — OPERATION  OF  CARS 

Conductors,  motormen  and  trainmen: 

(60)  Passenger  conductors,  motormen  and 

trainmen. 

(61)  Freight  and  express  conductors,  motor- 

men  and  trainmen. 
Miscellaneous  transportation  expenses: 

(62)  Miscellaneous  car  service  employees. 

(63)  Miscellaneous  car  service  expenses. 
Station  employees  and  expenses: 

(64)  Station  employees. 

(65)  Station  expenses. 


OPERATING  EXPENSE  61 

Carhouse  employees  and  expenses: 

(66)  Carhouse  employees. 

(67)  Carhouse  expenses. 

Signal,     interlocking,     telephone    and 
telegraph  systems: 

(68)  Operation  of  signal  and  interlocking 

systems. 

(69)  Operation  of  telephone  and  telegraph 

systems. 

(70)  Express    and    freight    collections    and 

delivery. 

(71)  Loss  and  damage. 

(72)  Other  transportation  expenses. 

Statistics  of  Actual  Operating  Expense 

FOR  Conducting  Transportation  on 

Typical  Electric  Interurban 

Railways 

Table  IV,  given  herewith,  has  been  compiled 
from  statistics  obtained  from  ten  representa- 
tive electric  interurban  railways  on  the  subject 
of  expense  per  car  mile  and  per  mile  of  track 
per  year  for  conducting  transportation: 


62     ECONOMICS  OF  INTERURBAN  RAILWAYS 


TABLE    IV. — GIVING  STATISTICS  OF  ACTUAL  OPERATING 

EXPENSE  FOR  CONDUCTING  TRANSPORTATION 

ON  TYPICAL  INTERURBAN  RAILWAYS 


Case 


Car  miles 
operated 
per  mile 
of  track 
per  year 


Expense 

per  car 

mile 


Expense 
per  mile 
of  track 
per  year 


(1). 
(2). 
(3). 
(4). 
(5). 
(6). 
(7). 
(8). 
(9). 
(10). 


Average 

Average  on  243,229 
miles  of  steam  road  in 
1911,  per  mile  of  line. 


33,756 
41,060 
25,478 
22,149 
20,527 
19,274 
15,856 
21,095 
18,593 
20,460 


22,490 


$0.0855 
0.0793 
0.1011 
0.0895 
0.0841 
0.0821 
0.1057 
0.0893 
0.1059 
0.0845 


$2,672 
3,242 
2,564 
1,978 
1,702 
1,562 
1,676 
1,884 
1,977 
1,727 


$0.0907 


$2,049 
3,887 


The  results  per  car  mile  shown  by  the  above 
roads  are  surprisingly  uniform.  The  expense 
per  mile  of  track  per  year  will  naturally  vary 
directly  with  the  frequency  of  the  service. 

Peincipal  Primary  Accounts  for  Conduct- 
ing Transportation 

The  principal  items  making  up  the  aggre- 
gate   expense    of    conducting    transportation 


OPERATING  EXPENSE  63 

are:  First — All  of  Group  I,  or  that  composed 
of  the  various  power  expenses.  This  expense, 
with  the  improvement  of  the  art  of  generating 
electricity  and  with  the  increase  in  the  volume 
of  power  generated,  has  a  downward  tendency. 
Second — The  wages  of  employees  engaged  in 
conducting  transportation.  This  expense  has 
a  slow  upward  tendency,  due  to  the  gradual 
increase  in  wages,  which  possibly  compensates 
the  downward  tendency  in  the  expense  of  the 
power  group.  The  higher  expense  for  wages 
on  steam  roads  is  due  to  the  fact  that  one  of 
the  greatest  savings  effected  by  electric  opera- 
tion over  steam  operation  is  in  the  lower  wage 
paid  the  train  crews  of  electric  trains  as  com- 
pared with  train  crews  on  steam  trains.  A 
motorman  or  conductor  of  an  electric  train 
gets  approximately  11/2  cents  per  train  mile 
operated,  while  an  engineer  or  conductor  of  a 
steam  train  gets  about  3  cents  per  train  mile 
operated. 

The  character  of  these  principal  items  and, 
indeed,  all  the  expenses  of  conducting  transpor- 
tation, and  the  fact  that  there  is  no  deprecia- 
tion charge,  indicate  that  the  operating  lines 
are  now  carrying  the  approximate  maximum 


64     ECONOMICS  OF  INTERURBAN  RAILWAYS 

burdens  under  this  heading.  It  is  evident 
from  the  statistics  given  above  that  the  average 
expense  of  electric  interurban  Hnes  for  conduct- 
ing transportation  is  about  9  cents  a  car  mile, 
which  is  equivalent  to  from  $1350  to  $1800 
per  mile  of  track  per  year  on  roads  maintaining 
a  basic  hourly  schedule. 

Geneeal  and  Miscellaneous 

The  last  of  the  general  headings  designated 
by  the  Interstate  Commerce  Commission  for 
electric  interurban  railway  accounts  is  that 
of  general  and  miscellaneous,  the  primary 
accounts  under  which  are  as  follows: 
Primary  accounts: 

General  expenses. 

Salaries  and  expenses  of  general  officers 
and  general  office  clerks. 

(73)  Salaries   and    expenses   of   general 
officers. 

(74)  Salaries   and    expenses    of   general 
office  clerks. 

(75)  General  office  supplies  and  expenses. 

(76)  Law  expenses. 

(77)  Relief  department  expenses. 


(78 
(79 
(80 

(81 
(82 
(83 
(84 

(85 
(86 

(87 
(88 


OPERATING  EXPENSE  65 

Pensions. 

Miscellaneous  general  expenses. 
Other  operations — Dr. 
Other  operations — Cr. 
Injuries  and  damages. 
Insurance. 

Stationery  and  printing. 
Store  and  stable  expenses. 

Store  expenses. 

Stable  expenses. 
Rent  of  tracks  and  terminals. 
Rent  of  equipment. 


Statistics  of  Actual  Operating  Expense 

FOR  General  and  Miscellaneous  Items 

ON  Typical  Electric  Interurban 

Railways 

The  expenses  per  car  mile  and  per  mile  of 
track  for  general  and  miscellaneous  items  for 
ten  typical  electric  interurban  railways  are  as 
follows: 


66     ECONOMICS  OF  INTERURBAN  RAILWAYS 


TABLE  v.— GIVING  STATISTICS  OF  ACTUAL  GENERAL  AND 

MISCELLANEOUS  OPERATING  EXPENSES  ON  TEN 

ELECTRIC  INTERURBAN  RAILWAYS 


Case 


Car  miles 

Expense 

Expense 
per  mile 

operated 

per  car 
mile 

of  track 
per  year 

33,756 

0.0169 

S561 

41,066 

0.0461 

1,893 

25,478 

0.0403 

1,022 

22,149 

0.0172 

379 

20,527 

0.0479 

887 

19,274 

0.0392 

750 

15,856 

0.0199 

315 

21,095 

0.0268 

565 

18,593 

0.0393 

718 

20,460 

0.0286 

585 

22,490 

0.0321 

$730 
287 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

(10) 

Average 

Average  on  243,229 
miles  of  steam  road  in 
1911,  per  mile  of  line 


Reference  to  the  individual  items  of  the 
schedule  of  general  and  miscellaneous  expenses 
will  disclose  the  cause  for  much  of  the  varia- 
tion in  this  branch  of  operating  expense  in  the 
above  cases.  The  item  of  rental  of  tracks 
and  terminals  must  of  necessity  introduce  a 
very  indeterminate  quantity,  and  the  other 
items  are  also  readily  seen  to  be  subject  to 
large  variations.     It  will  be  noted  that  this 


OPERATING  EXPENSE  67 

general  account  is  the  only  one  under  operating 
expense  in  which  the  electric  roads  exceed  the 
steam  roads.  This  condition  is  probably  due 
to  the  fact  that  this  account  is  divisible  into 
much  greater  mileages  on  steam  roads  than 
on  electric  roads. 

While  no  fixed  costs  can  be  determined  as 
applicable  to  all  electric  interurban  railways, 
yert  from  the  above  statistics  it  can  be  seen 
that  an  allowance  of  from  3  cents  to  4  cents 
per  car  mile  for  general  and  miscellaneous 
operating  expenses  is  adequate  for  the  average 
electric  road,  which  is  equivalent  to  from  $450 
to  $800  per  mile  of  track  per  year  for  roads 
operating  on  a  basis  hourly  schedule  and  using 
the  tracks  of  other  roads  in  entering  terminals. 

TOTAL  OPERATING  EXPENSE 

We  have  now  taken  up  one  by  one  the  five 
general  operating  expense  accounts,  ways  and 
structures,  equipment,  traffic,  conducting 
transportation  and  general  and  miscellaneous, 
and  by  means  of  an  analysis  of  the  primary 
accounts  involved  we  have  arrived  at  the 
decisive  factors  in  the  allowances  necessary 
under  these   headings   for  a   normal   electric 


68     ECONOMICS  OF  INTERURBAN  RAILWAYS 


interurban  railway  serving  normal  territory. 
It  would  now  be  well  to  assemble  these  various 
results  to  obtain  if  possible  a  general  deduc- 
tion in  regard  to  the  total  operating  expense 
of  such  a  line.  The  complete  summary  of  the 
statistics  for  the  cases  already  cited  is  given 
in  Table  VI: 

TABLE  VI.— SHOWING  A  SUMMARY  OF    THE    ACTUAL 

GENERAL  OPERATING  EXPENSES  FOR  THE  TEN 

TYPICAL  CASES  BEFORE  CITED 

Per  mile  of  track  per  year 


4.3 

a 

bD    O 

-d   ^ 

to     OJ 

<0 

y  and 
ctures 

S 

03 

uctin 
ortati 

ral  an 
laneo 

-3 
o 

miles 
rated 

a  a 

X    u 

O 

^1 

3 

H 

Cone 
transp 

Gene 
misce 

H 

Total 
per  c 

(1) 

$999 

$699|$10 

$2,672 

$561 

$4,950 

33,756i$0.1495 

(2) 

558 

790 

46 

3,242;  1,893 

6,521 

41,066 

0.1595 

(3) 

792 

567 

38 

2,564 

1,022 

4,984 

25,478 

0.1965 

(4) 

430 

471 

64 

1,978 

379 

3,322 

22,149 

0.1514 

(5) 

774 

476 

53 

1,702 

887 

3,892 

20,527 

0.1892 

(6) 

474 

402 

61 

1,562 

750 

3,249 

19,274 

0.1696 

(7) 

519 

357 

20 

1,676 

315 

2,887  15,856 

0.1821 

(8) 

760 

428 

89 

1,884 

565 

3,726  21,095 

0.1766 

(9) 

426 

379 

114 

1,977 

718 

3,614 

18,593 

0.1949 

(10) 

661 

582 

94 

1,727 

585 

3,649 

20,460 

0.1784 

Aver- 

$562 

$482  $48 

$2,049 

$730 

$3,872 

$0.1702 

age. 

Avera^ 

;e  on  243,229  k 

liles  of  steam 

road 

in   1911,  per 

mile  of  line 

$7,957 

OPERATING  EXPENSE  69 

The  above  statistics  indicate  that  the  ap- 
proximate average  expense  per  mile  of  track  per 
year  for  electric  operation  is  one-half  that  for 
steam  railroad  operation.  These  statistics 
also  show  that  the  average  expense  of  operat- 
ing the  roads  represented  by  the  above  cases, 
under  the  system  of  accounting  now  in  vogue, 
is  approximately  17  cents  per  car  mile. 

General  Conclusions  Concerning  the  Cost 

OF  Operating  Electric  Interurban 

Railways 

From  the  preceding  discussion  of  the  operat- 
ing expense  of  existing  electric  interurban 
railways  and  the  discussion  of  elements  of  the 
operating  expense  not  now  properly  taken 
into  account,  the  general  summary  of  the 
approximate  operating  expense  of  a  normal 
electric  interurban  railway  shown  in  Table 
VII  has  been  prepared: 


70     ECONOMICS  OF  INTERURBAN  RAILWAYS 

TABLE  VII.— SHOWING  THE  ESTIMATED  OPERATING  EX- 
PENSE UNDER  THE  GENERAL  OPERATING  EXPENSE 
ACCOUNTS  FOR  NORMAL  ELECTRIC 
INTERURBAN    RAILWAYS 


Operating  account 


Expense  per  mile 
of  track  per  year 


Way  and  structures 

Equipment 

Traffic 

Conducting  transportation. 
General  and  miscellaneous. 


Total $3,100 


$1,000 

600 

150 

1,800 

800 


$4,350 


These  figures  of  $3100  to  $4350  for  the  operat- 
ing expense  of  electric  interurban  railways 
apply  to  such  as  serve  normal  territories  and 
operate  a  basic  schedule  of  hourly  service. 


Taxes 

One  other  important  expense  which  an 
electric  interurban  railway  has  to  meet  and 
which  is  not  included  in  the  operating  expense, 
that  of  taxes,  may  well  be  considered  at  this 
point.  Taxes  vary  largely  on  different  roads 
in  different  states,  as  illustrated  by  the  statistics 
in  Table  VIII. 

The  variation  in  taxes  per  mile  of  line  as 
indicated  is  largely  due  to  the  fact  that  the 


OPERATING  EXPENSE 


71 


electric  interurban  railway  is  of  modern  date 
and  no  uniform  valuation  for  the  assessment 
of  these  properties  has  been  established  in  the 
various  states.  The  fact  that  the  taxes  on 
electric  interurban  railways  are  considerably 
below  those  on  steam  railway  lines  indicates 

TABLE    VIII.— SHOWING    THE    ACTUAL    TAXES    ASSESSED 

ON  TEN  TYPICAL  ELECTRIC  INTERURBAN 

RAILWAYS 


Case 


State 


Miles 
of  track 


Total 
taxes 


Taxes 
per  mile 
of  track 


(1)  Indiana 

(2)  Indiana 

(3)  Illinois 

(4)  Illinois 

(5)  Iowa 

(6)  Ohio 

(7)  Ohio 

(8)  New  York 

(9)  Connecticut. . . 
(10)  Massachusetts. 


Average  taxes  per  mile  of 

track. 
Average  on  243,229  miles  of 

steam  road  in   1911,  per 

mile  of  line. 


58.7 

32 
406 
160 

74 
222 

41 
180 

21 

21 


$11,729 

3,870 

117,147 

51,000 

9,525 

41,312 

6,122 

29,289 

7,511 

2,016 


$199 
121 
288 
318 
128 
186 
149 
162 
357 
96 


$156 
448 


that  the  former  are  likely  to  have  a  general 
upward  tendency,  until  they  approximately 
equal    those    of    the    steam   railways.     As   a 


72     ECONOMICS  OF  INTERURBAN  RAILWAYS 

general  conclusion  it  may  be  stated  that  taxes 
on  electric  interurban  railways  will  be  increased, 
and  that  $250  per  mile  of  track  per  year  is  the 
minimum  amount  that  can  be  safely  used  for 
estimating  this  item. 


CHAP'TER  V 
COST  OF  CONSTRUCTION 

THUS  far  we  have  covered  the  salient  points 
in  connection  with  the  operating  revenues 
and  operating  expense  of  existing  electric  in- 
terurban  railways  and  deduced  the  general  prin- 
ciples underljdng  this  operating  feature  for  a 
proposed  electric  interiuban  railway.  But 
the  promoter  and  investor  desire  to  know  about 
more  than  operating  revenues  and  operating 
expense.  They  are  also  highly  concerned  in 
the  subject  of  cost  of  construction,  and  we 
shall  now  take  up  this  other  division  of  our 
subject  and  endeavor  to  give  general  estimates 
that  may  be  of  value  to  a  proposed  electric 
interurban  railway  builder  or  investor. 

Classification  of  Construction  Costs 

Expenditures  for  the  road  and  equipment 
of  electric  railways,  as  prescribed  by  the  Inter- 

73 


74     ECONOMICS  OF  INTERURBAN  RAILWAYS 

state   Commerce   Commission   in   accordance 
with  Section  20  of  an  act  to  regulate  commerce, 
fall  under  three  main  heads: 
I.  Road. 
II.  Equipment. 

III.  General  expenditures. 

Each  of  these  general  headings  is  divided 
by    the    commission    into    detailed    primary- 
accounts,  as  follows : 
Primary  accounts: 
I.  Road: 

(1)  Engineering  and  superintendence. 

(2)  Right-of-way. 

(3)  Other   land   used   in   electric   railway 

operation. 

(4)  Grading. 

(5)  Ballast. 

(6)  Ties. 

(7)  Rails,  rail  fastenings  and  Joints. 

(8)  Special  work. 

(9)  Underground  construction. 

(10)  Paving. 

(11)  Track  laying  and  surfacing. 

(12)  Roadway  tools. 

(13)  Tunnels. 

(14)  Elevated  structures  and  foundations. 


COST  OF  CONSTRUCTION  75 

(15)  Bridges,  trestles  and  culverts. 

(16)  Crossings,    fences,  cattle  guards    and 

signs. 

(17)  Interlocking  and  other  signal  apparatus. 

(18)  Telegraph  and  telephone  lines. 

(19)  Poles  and  fixtures. 

(20)  Underground  conduits. 

(21)  Transmission  system. 

(22)  Distribution  system.     . 

(23)  Dams,  canals  and  pipe  lines. 

(24)  Power-plant  buildings. 

(25)  Substation  buildings. 

(26)  General  office  buildings. 

(27)  Shops  and  carhouses. 

(28)  Stations,  waiting  rooms  and  miscella- 

neous buildings. 

(29)  Docks  and  wharves. 

(30)  Power-plant  equipment. 

(31)  Substation  equipment. 

(32)  Shop  equipment. 

(33)  Park  and  resort  property. 

(34)  Cost  of  road  purchased. 
II.  Equipment: 

(35)  Cars. 

(36)  Locomotives. 

(37)  Electric  equipment  of  cars. 


76     ECONOMICS  OF  INTERURBAN  RAILWAYS 

(38)  Other  rail  equipment. 

(39)  Miscellaneous  equipment. 
III.  General  expenditures: 

(40)  Law  expenses. 

(41)  Interest. 

(42)  Injuries  and  damages. 

(43)  Taxes. 

(44)  Miscellaneous. 

It  is  obvious  that  no  fixed  rule  may  be  laid 
down  for  the  amount  of  money  to  be  expended 
by  a  proposed  electric  interurban  railway  for 
any  of  the  above  items,  and  they  are  so  numer- 
ous and  the  outlays  of  the  existing  companies 
for  them  so  varied  that  we  shall  not  take  the 
space  here  for  the  detail  work  leading  up  to 
our  generalizations.  Suffice  it  to  say  that  as  a 
result  of  careful  study  of  the  cost  of  construc- 
tion of  existing  roads  we  have  arrived  at  maxi- 
mum and  minimum  expenditures  for  each 
item  that  fairly  approximate  the  limits  of 
outlay  of  a  proposed  electric  interurban  railway 
under  average  conditions.  Taking  up  each 
primary  account,  therefore,  under  the  number 
given  it  in  the  above  classification,  we  shall 
state  only  what  it  covers  and  our  estimated 
limits  of  expenditure  for  it. 


COST  OF  CONSTRUCTION  77 

Primary  Accounts  for  Road  Construction 

What  each  primary  account  under  the  first 
main  heading  of  road  construction  includes 
and  what  a  promoter  may  figure  on  expending 
therefor  is  shown  by  the  following : 

(1)    ENGINEERING  AND  SUPERINTENDENCE  I 

This  account  covers  expenditures  for  serv- 
ices of  engineers,  draftsmen,  superintendents 
employed  on  preliminary  and  construction 
work  and  all  expenses  incidental  to  the  work. 
This  item  will  run  approximately  5  per  cent 
of  the  cost  of  the  work  and  will  vary  between 
$1000  and  $2000  per  mile  of  single  track. 

(2)  right-of-way: 

This  includes  the  cost  of  land  acquired  for 
roadbed  and  all  expenses  incidental  thereto, 
such  as  cost  of  condemnation  proceedings, 
abutting  property  damages,  etc.  The  cost  of 
procuring  right-of-way  is  entirely  dependent 
on  local  conditions,  and  no  set  rule  can  be 
established.  The  right-of-way  will  measure 
2  acres  per  mile  for  each  rod  in  width  and  a 
well-constructed  line  should  be  4  to  5  rods  in 


78     ECONOMICS  OF  INTERURBAN  RAILWAYS 

width,  making  a  total  of  from  8  to  10  acres 
per  mile.  It  may  be  roughly  estimated  that 
the  acreage  cost  of  right-of-way  will  be  twice 
the  prevaihng  acreage  price  of  the  adjacent 
land.  On  a  line  constructed  through  a  farming 
country  in  which  the  land  is  worth  $100  an 
acre,  therefore,  the  right-of-way  will  probably 
cost  $200  an  acre,  or  $2000  per  mile,  for  5  rods 
in  width. 

(3)  OTHER  LAND  USED  IN  ELECTRIC  RAILWAY 
OPERATIONS : 

This  covers  the  cost  of  land  acquired  for  use 
in  operating  the  road  other  than  for  roadbed 
purposes.  In  general,  this  item  of  cost  is  small 
and  is  made  up  almost  wholly  of  the  cost  of  the 
ground  for  power-house  and  carhouse  purposes. 
It  may  be  roughly  estimated  at  from  $100  to 
$500  per  mile  of  track. 

(4)  grading: 

The  cost  of  grading  the  roadbed  and  all 
things  incidental  to  the  making  of  the  roadbed, 
such  as  retaining  walls,  rip-rap,  ditches  for 
waterway,  etc.,  comes  under  this  heading. 
The  amount  of  grading  is  entirely  dependent 


COST  OF  CONSTRUCTION  79 

upon  the  topography  of  the  country  traversed 
and  the  maximum  gradient  under  which  the 
line  is  built.  For  a  well-constructed  line  it 
may  be  generally  estimated  that  the  grading 
will  vary  between  10,000  cu.  yd.  and  20,000 
cu.  yd.  per  mile,  at  an  average  cost  of  from  25 
cents  to  30  cents  per  cubic  yard,  making  the 
approximate  limits  $2500  and  $6000  per  mile 
of  track. 

(5)  ballast: 

Ballast  includes  the  cost  of  material  used 
and  the  expenses  of  loading,  hauling,  transport- 
ing and  unloading  along  the  track.  The 
ballast  used  wiU  vary  from  2000  cu.  yd.  to 
3000  cu.  yd.  per  mile,  and  the  cost  will  vary, 
with  the  availabihty  of  the  material,  from  75 
cents  to  $1.50  per  cubic  yard,  making  the 
approximate  cost  per  mile  of  track  vary  between 
$1500  and  $4500. 

(6)  ties: 

This  heading  includes  the  cost  of  cross, 
switch,  bridge  and  other  ties,  and  the  cost  of 
transportation,  inspection,  handling,  and  pres- 
ervation, but  not  the  final  distribution.     Ties 


80     ECONOMICS  OF  INTERURBAN  RAILWAYS 

will  run  approximately  2600  to  the  mile,  and 
will  vary  in  cost  from  70  cents  to  $1,  making 
the  cost  from  $1820  to  $2600  per  mile. 

(7)  RAILS,  RAIL  FASTENINGS  AND  JOINTS*. 

This  is  similar  to  the  above,  covering  the 
cost  of  rails,  rail  fastenings  and  joints,  and 
transportation,  inspection  and  handling,  but 
not  the  final  distribution.  The  quantity  will 
vary  with  the  weight  of  the  rail  used.  An 
80-lb.  rail  weighs  126  tons  per  mile,  and  a  70-lb. 
rail  weighs  110  tons  per  mile.  The  price  of  the 
rail  will  be  about  $30  per  ton.  The  cost  of  rail 
fastenings  and  joints  will  be  about  11  per  cent, 
of  the  cost  of  the  rail,  so  that  the  cost  per  mile 
for  a  70-lb.  rail,  with  fastenings  and  joints, 
will  be  approximately  $3700  and  for  an  80-lb. 
rail  approximately  $4200. 

(8)  SPECIAL  WORK : 

By  this  is  meant  the  cost  of  steam  and  street 
railway  crossings,  switches,  turn-outs,  etc., 
including  transportation,  inspection  and  han- 
dling, but  not  the  final  distribution.  The 
special  work  expense  will  vary  with  local  con- 


COST  OF  CONSTRUCTION  81 

ditions  but  will  usually  be  between  $400  and 
$600  per  mile  of  track. 

(9)    UNDERGROUND  CONSTRUCTION: 

This  refers  only  to  railways  operated  by 
underground  electric  contacts  and  therefore 
does  not  apply  to  electric  interurban  railways. 

(10)  paving: 

This  embraces  the  cost  of  labor  and  material 
for  paving  between  rails  and  the  outside  thereof, 
as  may  be  required  by  city  ordinances.  As 
electric  interurban  railways  generally  operate 
over  leased  tracks  into  cities  with  paved  streets, 
this  item  does  not  usually  enter  into  the  cost 
of  constructing  roads.  If  it  does  enter  into 
the  construction  expense,  the  expense  will  vary 
in  proportion  to  the  amount  of  paving  required. 

(11)  TRACK  LAYING  AND  SURFACING: 

The  cost  of  distributing  the  track  materials 
and  of  constructing  the  track,  together  with 
the  cost  of  spreading  the  ballast  and  placing 
it  under  the  track,  are  all  included  herein. 
This  cost  will  vary  from  $800  to  $1200  per 
mile  of  track. 


82     ECONOMICS  OF  INTERURBAN  RAILWAYS 
(12)    ROADWAY  tools: 

This  heading  covers  the  cost  of  the  first 
outfit  of  tools  necessary  to  equip  the  mainte- 
nance of  way  and  structures  gangs  for  properly 
maintaining  and  repairing  the  property  when 
it  is  opened  for  the  handling  of  commercial 
traffic.  It  may  be  roughly  estimated  at  $50 
per  mile. 

(13)  tunnels: 

The  cost  of  tunneUng,  material  used  and 
labor  expended  in  the  construction  of  tunnels 
are  factors  in  this  account.  As  tunnels  are 
rare  on  electric  interurban  railways,  however, 
this  item  will  not  be  further  considered. 

(14)  ELEVATED  STRUCTURES  AND  FOUNDATIONS: 

This  refers  only  to  companies  operating 
elevated  railway  systems  and  does  not  apply 
to  electric  interurban  railways. 

(15)  BRIDGES,  TRESTLES  AND  CULVERTS: 

These  items  include  the  cost  of  materials 
used  and  labor  expended  in  the  construction 
of  bridges  and  trestles,  both  substructure  and 
superstructure,  erected  to  carry  tracks  over 


COST  OF  CONSTRUCTION  83 

streams,  ravines  or  the  tracks  of  other  railways, 
and  of  culverts.  The  expenditure  here  depends 
absolutely  upon  the  local  conditions  and  will 
show  a  great  variation  on  different  roads. 
For  the  general  purpose  of  showing  the  approxi- 
mate cost  to  electric  interurban  railways,  it 
may  be  assumed  to  vary  between  $2000  and 
$4000  per  mile  of  track. 

(16)  CROSSINGS,  FENCES,  CATTLE  GUARDS  AND 
SIGNS : 

This  account  contains  the  cost  of  material 
used  and  labor  expended  in  constructing  street, 
road  and  farm  crossings  at  grade,  overhead 
bridges,  viaducts,  fences,  cattle  guards,  etc. 
The  cost  may  be  roughly  stated  as  varying 
between  $500  and  $1000  per  mile. 

(17)  INTERLOCKING  AND  OTHER  SIGNAL  APPA- 
RATUS : 

This  heading  covers  the  cost  of  material 
used  and  labor  expended  in  constructing 
interlocking  and  other  signal  apparatus,  com- 
plete. The  outlay  per  mile  will  depend  entirely 
upon  the  amount  of  signaling  installed.  As 
most  roads  have  been  constructed  without  the 


84     ECONOMICS  OF  INTERURBAN  RAILWAYS 

installation  of  any  signal  system,  however,  the 
cost  may  be  said  to  vary  from  a  nominal  sum 
to  $2500  per  mile. 

(18)  TELEGRAPH  AND  TELEPHONE  LINES: 

By  this  heading  is  meant  the  cost  of  material 
used  and  labor  expended  in  constructing  tele- 
graph and  telephone  lines,  for  use  in  dispatch- 
ing and  other  business  of  the  railway.  This 
item  will  vary  in  cost  from  $100  to  $500  per 
mile. 

(19)  POLES  AND  fixtures: 

This  account  contains  the  cost  of  poles, 
cross-arms,  insulating  pins,  brackets  and  other 
pole  fixtures,  also  other  structures  for  support- 
ing overhead  transmission  lines,  and  all  labor 
expended  in  connection  with  the  construction 
of  pole  lines  or  structures.  These  items  will 
vary  from  $500  to  $1500  per  mile  in  cost. 

(20)    UNDERGROUND  CONDUITS: 

This  embraces  the  cost  of  material  and  labor 
expended  in  constructing  conduits  required 
for  underground  wires  and  cables.  It  does 
not   usually   enter   into   the   construction   of 


COST  OF  CONSTRUCTION  85 

electric  interurban  railways  and  therefore  wiU 
not  be  considered  as  a  probable  cost  of  con- 
struction. 

(21)  TRANSMISSION  SYSTEM: 

The  transmission  system  account  is  com- 
posed of  the  cost  of  the  high-tension  trans- 
mission system,  including  cables,  wires,  insula- 
tors and  insulating  material.  The  cost  will 
vary  between  $500  and  $1200  per  mile  of  track. 

(22)  DISTEIBUTION  SYSTEM! 

Here  is  included  the  cost  of  material  used 
and  labor  expended  in  constructing  the  dis- 
tributing system  for  transmission  of  low-tension 
power,  including  insulators  and  connections; 
track  bonding  and  all  labor  incidental  to  the 
same;  overhead  trolley  Unes,  including  cost  of 
trolley,  guard,  span,  strain  and  other  wires; 
the  cost  of  the  third  rail  and  all  materials  used 
and  labor  expended  incidental  to  laying  the 
third  rail.  The  expenditure  in  this  case  will 
vary  from  $1500  per  mile  (in  the  case  of  over- 
head hues)  to  $5000  per  mile  for  the  third  rail. 


86     ECONOMICS  OF  INTERURBAN  RAILWAYS 

(23)  DAMS,  CANALS  AND  PIPE  LINES: 

This  has  reference  primarily  to  dams  and 
canals,  etc.,  for  the  utilization  of  water  power, 
which,  not  being  a  usual  feature  in  the  con- 
struction of  electric  interurban  railways,  will 
not  be  further  considered. 

(24)  POWER-PLANT  BUILDINGS  I 

This  covers  the  cost  of  material  used  and 
labor  expended  in  erecting  buildings  to  be 
used  for  power-generating  plants,  as  well  as 
the  excavations,  gas  and  water-pipe  connec- 
tions, etc.,  incidental  thereto.  The  cost  here 
will  vary  between  $15  and  $20  per  kilowatt 
of  station  capacity,  which  capacity  will  range 
from  40  kw.  to  60  kw.  per  mile  of  track,  making 
the  cost  of  the  power-house  buildings  from 
$600  to  $1200  per  mile  of  track. 

(25)  SUBSTATION  buildings: 

This  caption  embraces  the  cost  of  material 
used  and  labor  expended  in  erecting  buildings 
for  use  as  power  substations.  The  cost  will 
range  between  $300  and  $500  per  mile  of  track. 


COST  OF  CONSTRUCTION  87 

(26)  GENERAL  OFFICE  BUILDINGS : 

As  it  is  unusual  for  electric  interurban  rail- 
ways to  own  a  general,  office  building  in  fee, 
this  cost  will  be  eliminated  from  this  discussion. 

(27)  SHOPS  AND  CARHOUSES : 

The  cost  of  material  used  and  Jabor  expended 
on  buildings  to  be  used  as  shops,  sheds  or  car- 
houses,  and  on  plants  for  furnishing  power  for 
heating  and  lighting,  is  included  in  this  account, 
as  well  as  the  cost  of  construction  of  oil  houses, 
sand  houses  and  storehouses.  This  outlay  will 
vary  between  $400  and  $600  per  mile  of  track. 

(28)  STATIONS,    WAITING    ROOMS    AND    MISCEL- 
LANEOUS buildings: 

This  covers  the  cost  of  material  used  and 
labor  expended  in  the  erection  of  stations,  wait- 
ing rooms  and  other  buildings  not  heretofore 
classified.  It  includes  also  the  furniture  and 
fixtures  used  to  complete  these  buildings. 
This  cost  will  run  from  $100  to  $200  per  mile  of 
track. 


88     ECONOMICS  OF  INTERURBAN  RAILWAYS 

(29)  DOCKS  AND  wharves: 

As  this  item  is  not  usual  in  electric  interurban 
railway  construction,  it  will  not  be  considered 
further. 

(30)  POWER-PLANT   EQUIPMENT: 

By  this  heading  is  meant  the  cost  of  material 
and  labor  expended  in  equipping  plants  for  gen- 
erating power;  the  cost  of  engines,  boilers, 
pumps,  condensers  and  all  equipment  for  gen- 
erating electric  current,  and  also  the  cost  of 
foundations  for  any  of  the  foregoing  equipment, 
switchboards  and  all  fixtures  and  appliances 
connected  therewith.  This  item  of  cost  will 
vary  between  $50  and  $75  per  kilowatt  of 
capacity,  and  as  the  power  requirements  will 
vary  from  40  kw.  to  60  kw.  per  mile  of  track, 
the  cost  will  be  between  $2000  and  $4500  per 
mile  of  track. 

(31)  SUBSTATION    EQUIPMENT: 

Here  is  embraced  the  cost  of  material 
used  and  labor  expended  in  equipping  power 
substations  and  the  cost  of  storage  batteries, 
transformers,  rotary  converters,   switchboard 


COST  OF  CONSTRUCTION  89 

and   foundations   therefor.     The   outlay   will 
vary  between  $750  and  $1500  per  mile  of  track. 

(32)  SHOP  equipment: 

* 

This  includes  the  cost  of  machinery  and  tools 
used  in  shops  and  carhouses,  including  also 
boilers,  engines,  motors  and  all  appliances  and 
tools  first  necessary  to  equip  the  shops.  The 
estimated  expenditure  for  this  account  is  from 
$150  to  $300  per  mile  of  track. 

(33)  PARK  AND  RESORT  PROPERTY: 

The  cost  of  property  for  amusement  parks  or 
resorts  is  herein  provided  for.  As  this  is  not 
an  essential  to  the  construction  of  an  electric 
interurban  railway,  it  will  not  be  considered  in 
this  discussion. 

(34)  COST  OF  ROAD  PURCHASED : 

For  obvious  reasons  this  item  will  also  be 
eliminated  from  this  discussion. 


Primary  Accounts  for  Cost  of 
Equipment 

Following  out  the  same  plan  as  given  for  the 
cost  of  road  construction,  we  find  that  the  in- 


90     ECONOMICS  OF  INTERURBAN  RAILWAYS 

formation  concerning  the  primary  cost  of  equip- 
ment accounts  may  be  classified  as  follows: 

(35)  cars: 

This  account  covers  all  expenditures  for 
passenger,  baggage,  express,  freight,  mail  and 
other  cars,  from  the  operation  of  which  revenue 
is  to  be  derived,  and  the  car  bodies,  trucks,  and 
all  fixtures  or  appliances  inside  of,  or  attached 
to,  the  car  bodies  or  trucks  except  the  electric 
equipment  of  the  cars.  Electric  interurban 
railways  require  from  one  car  for  every  5  miles 
operated  to  one  car  for  every  3  miles  operated. 
Cars  will  vary  in  cost  from  $4000  to  $8000,  and 
therefore  the  cost  of  this  item  will  be  between 
$800  a  mile  and  $2600  a  mile. 

(36)  locomotives: 

This  means  all  expenditures  for  locomotives, 
including  all  appurtenances,  furniture,  fixtures 
and  electric  equipment,  necessary  to  fit  them 
for  service.  As  locomotives  are  not  essential 
to  the  service  rendered  by  an  electric  inter- 
urban railway,  this  item  will  not  be  considered 
as  a  necessary  construction  cost. 


COST  OF  CONSTRUCTION  91 

(37)  ELECTRIC   EQUIPMENT  OF  CARS! 

This  includes  all  expenditures  for  electrical 
equipment  and  wiring  of  all  cars  of  whatsoever 
nature.  The  outlay  for  this  will  vary  from 
$3000  to  $5000  per  car  and  from  $600  to  $1600 
per  mile  of  track. 

(38)  OTHER   RAIL   EQUIPMENT: 

Herein  are  grouped  all  expenditures  for 
water  cars,  sprinkling  cars,  sand  cars,  salt  cars, 
supply  cars,  and  other  work  cars;  also  snow 
plows,  sweepers  and  scrapers.  This  cost  will 
vary  between  $200  and  $500  per  mile. 

(39)  MISCELLANEOUS   EQUIPMENT: 

This  account  contains  all  expenditures  for 
horses,  wagons,  harness,  automobiles  and 
other  road  equipment.  As  the  expenditures 
under  this  item  are  relatively  small,  the  cost 
is  considered  negligible  and  is  therefore 
eliminated. 

Primary  Accounts  for  General  Construc- 
tion Expenditures 

The  various  primary  accounts  prescribed 
by  the  Interstate  Commerce  Commission  for 
general  expenditures  in  connection  with  con- 


92     ECONOMICS  OF  INTERURBAN  RAILWAYS 

Btruction  are  as  follows,  with  our  estimate  of 
cost  for  each  item: 

(40)  LAW  expenses: 

By  these  are  meant  expenditm-es  for  counsel, 
solicitors  and  attorneys,  their  clerks  and  attend- 
ants and  expenses  of  their  offices,  together 
with  all  incidental  legal  expenses  dm-ing  the 
construction  of  the  road.  This  cost  will  run 
from  $200  to  $500  per  mile  of  track. 

(41)  inteeest: 

This  includes  the  interest  on  the  moneys 
used  incidental  to,  and  during  the  period  of, 
construction  but  does  not  include  discounts 
and  commissions  on  securities  issued  for  con- 
struction purposes.  This  will  vary  from  $1000 
to  $2000  per  mile  of  track. 

(42)    INJURIES  AND  DAMAGES! 

This  account  covers  aU  expenses  incidental 
to  injuries  to  persons  or  damages  to  property 
caused  directly  in  connection  with  the  con- 
struction of  the  road  and  equipment.  The 
expenditure  necessitated  here  will  lie  between 
$100  and  $200  per  mile  of  track. 


COST  OF  CONSTRUCTION  93 

(43)  T.\XEs: 

This  embraces  all  taxes  and  assessments 
levied  and  paid  on  the  company's  property 
while  under  construction.  This  outlay  usually 
amounts  to  very  little  and  is  estimated  at 
from  $50  to  $100  per  mile  of  track. 

(44)  miscellaneous: 

Under  this  caption  are  grouped  all  organi- 
zation expenses,  including  the  payment  of  all 
organization  fees,  the  cost  of  preparing  cer- 
tificates of  stocks  and  bonds,  the  payment  of 
trustees'  fees,  expenses  incurred  in  the  disposal 
of  securities,  salaries  and  expenses  of  executive 
and  general  officers  of  a  road  under  construc- 
tion and  general  office  clerks,  rent  of  office 
space,  and  all  items  of  special  and  incidental 
nature  which  cannot  properly  be  charged  to 
any  other  account  in  this  classification.  The 
cost  here  will  vary  from  $500  to  $1000  per  mile 
of  track. 

Summary  of  Construction  Costs 

In  the  above  discussion  we  have  taken  up 
one  by  one  the  primary  road,  equipment  and 
miscellaneous  construction  accounts  and  given 


94     ECONOMICS  OF  INTERURBAN  RAILWAYS 


for  each  one  what  we  deemed  to  be  fair  maxi- 
mum and  minimum  limits  of  expenditure  for 
a  proposed  electric  interurban  railway  under 
average  conditions.  It  might  be  to  the  reader's 
advantage  now  briefly  to  summarize  these  esti- 
mates in  table  form,  in  order  that  he  may  see 
at  a  glance  their  sum  total  and  relative  weights. 
This  information  is  accordingly  presented  in 
Table  IX. 

TABLE    IX.— SHOWING    A    SUMMARY    OF    THE    PRIMARY 

CONSTRUCTION  COSTS    PREVIOUSLY  CITED    FOR 

A  PROPOSED  ELECTRIC  INTERURBAN 

RAILWAY 


Accounts 


Cost  per  mile  of  track 


Minimum     Maximum 


(1)  Engineering  and  superintend- 

ence. 

(2)  Right-of-way 

(3)  Other    land    used    in    electric 

railway  operations. 

(4)  Grading 

(5)  BaUast 

(6)  Ties 

(7)  Rails,  rail  fastenings  and  joints 

(8)  Special  work 

(9)  Underground  construction. . .  . 

(10)  Paving 

(11)  Track  laying  and  surfacing. . . . 

(12)  Roadway  tools 

(13)  Tunnels 

(14)  Elevated  structures  and  foun- 

dations. 


$1,000  $2,000 


2,000 
100 

2,500 
1,500 
1,820 
3,700 
400 


800 
50 


4,000 
500 

6,000 
4,500 
2,600 
4,200 
600 


1,200 
50 


COST  OF  CONSTRUCTION 


95 


Accounts 


Cost  per  mile  of  track 


Minimum    Maximum 


(15)  Bridges,  trestles  and  culverts.  . 

(16)  Crossings,  fences,  cattle  guards 

and  signs. 

(17)  Interlocking  and  other  signal 

apparatus. 

(18)  Telegraph  and  telephone  lines . 

(19)  Poles  and  fixtures 

(20)  Underground  conduits 

(21)  Transmission  system 

(22)  Distribution  system r 

(23)  Dams,  canals  and  pipe  Unes . . . 

(24)  Power-plant  buildings 

(25)  Substation  buildings 

(26)  General  office  buildings 

(27)  Shops  and  carhouses 

(28)  Stations,    waiting   rooms   and 

miscellaneous  buildings. 

(29)  Docks  and  wharves 

(30)  Power-plant  equipment 

(31)  Substation  equipment 

(32)  Shop  equipment 

(33)  Park  and  resort  property 

(34)  Cost  of  road  purchased 

(35)  Cars 

(36)  Locomotives 

(37)  Electric  equipment  of  cars. . .  . 

(38)  Other  rail  equipment 

(39)  Miscellaneous  equipment 

(40)  Law  expenses 

(41)  Interest 

(42)  Injuries  and  damages 

(43)  Taxes 

(44)  Miscellaneous 

Total 


2,000 
500 


100 
500 


500 
1,500 


600 
300 


400 
100 


2,000 
750 
150 


800 


600 
200 


200 

1,000 

100 

50 

500 


4,000 
1,000 

2,500 

500 
1,500 


1,200 
5,000 


1,200 
500 


600 
200 


4,500 

1,500 

300 


2,600 


1,600 
500 


500 

2,000 

200 

100 

1,000 


$26,720 


$58,650 


96     ECONOMICS  OF  INTERURBAN  RAILWAYS 

General  Conclusions  Concerning 
Cost  of  Construction 

The  summary  in  the  above  table  shows  that 
the  probable  limits  of  cost  for  the  construction 
of  electric  interurban  railways  are  $26,720  and 
$38,650.  These  figures  clearly  indicate  the 
possible  wide  variation  of  such  expenditures. 
The  approximate  average  cost  of  constructing 
existing  electric  interurban  railways  that  are 
in  the  category  of  what  are  herein  called  normal 
electric  interurban  railways  was  about  $35,000 
per  mile.  It  is  true,  on  the  other  hand,  that 
there  are  a  number  of  roads,  also  qualifying  in 
many  respects  as  normal  roads,  which  cost  less 
than  the  minimum  shown  in  the  summary  in 
Table  IX,  due  perhaps  to  the  lack  of  sufiicient 
car  equipment,  of  power-plant  buildings  or 
equipment,  or  of  any  other  elements  of  con- 
struction. Such  a  low  construction  cost  might 
all  be  caused  by  the  company  having  been  sub- 
sidized by  monetary  subscriptions,  free  right-of- 
way  or  other  benefits.  At  any  rate,  the  figures 
for  the  average  case  are  those  given  above,  and 
they  should  prove  enlightening  to  those  who 
are  laboring  under  the  erroneous  impression 


COST  OF  CONSTRUCTION  97 

that  electric  interurban  railways  can  be  built 
for  insignificant  amounts. 

We  have  endeavored  thus  far  to  obtain  by  a 
study  of  existing  electric  interurban  railways 
general  figures  for  construction  costs  that  will 
be  of  value  to  the  layman  interested  in  such 
projects.  These  figures  are  not  definite,  how- 
ever; they  cannot  be,  for  it  is  difficult  to  give 
even  an  approximate  statement  with  regard  to 
the  cost  of  building  a  proposed  line  unless  a  full 
knowledge  has  been  obtained  of  the  construc- 
tional elements  entering  therein  and  of  the  re- 
quirements for  power  and  car  equipment.  As 
in  the  case  of  determining  operating  revenue, 
it  would  be  best  to  leave  it  to  a  competent 
expert,  of  good  judgment,  to  estimate  this  cost 
of  construction,  yet  we  believe  that  if  the  lay- 
man makes  a  proper  study  of  conditions  sur- 
rounding the  projected  enterprise,  he  will  be 
aided  in  judging  its  worth  by  a  reference  to 
Table  IX  to  find  out  the  maximum  and  mini- 
mum limits  for  normal  roads  fully  equipped 
with  the  necessary  power  stations  and  cars  and 
operating  in  normal  territory.  He  must  dis- 
tinctly bear  in  mind,  however,  that  none  of 
these  conclusions  refers  to  abnormal  lines  serv- 

7 


98     ECONOMICS  OF  INTERURBAN  RAILWAYS 

ing  abnormal  territory.  In  fact,  many  short 
electric  roads  have  been  constructed  with  light 
rail  and  equipment  for  astonishingly  low  costs, 
but  usually  the  advantage  of  the  low  cost  of 
construction  has  been  offset  by  the  high  cost  of 
operation. 


CHAPTER  VI 

ECONOMIC  RELATIONS.     OPERATING 

REVENUES,  OPERATING  EXPENSES, 

AND  COST  OF  CONSTRUCTION 

THE  prevailing  rates  of  interest,  demanded 
by  the  investing  public,  on  the  securities 
of  electric  interurban  railways,  range  from  6 
per  cent,  to  7  per  cent.,  which  high  rates  have 
been  largely  brought  about  by  the  construc- 
tion of  so  many  unprofitable  roads  through 
ignorance  of  the  fundamentally  essential  ele- 
ments entering  into  such  an  undertaking. 
In  order  to  borrow  from  the  investing  public 
the  necessary  funds  with  which  to  construct 
an  interurban  railway,  the  project  must  show 
an  earning  power  of  a  net  revenue,  after  paying 
operating  expenses  and  taxes,  of  from  one  and 
one-half  to  two  times  the  amount  of  the  inter- 
est on  the  construction  cost,  to  be  computed 
on  a  basis  of  from  6  per  cent,  to  7  per 
cent. 

99 


100     ECONOMICS  OF  INTERURBAN  RAILWAYS 

Hypothetical  Application  of  the  Hereto- 

FORE  Established  Principles  Governing 

Operating  Revenues,  Operating 

Expenses,  Construction 

Costs 

CASE    1 

Under  Case  1  it  is  proposed  to  construct  a 
normal  road  from  a  primary  terminal  city  of 
50,000  population  through  a  normal  territory 
to  a  town  of  5000  population  10  miles  distant, 
thence  to  another  town  of  the  same  population 
also  10  miles  distant,  and  thence  to  a  third 
similar  town  10  miles  distant.  This  line  will 
be  30  miles  long  and  will  have  an  intermediate 
town  and  village  population  of  15,000,  with 
no  secondary  terminal.  Under  such  conditions, 
as  determined  in  the  first  article,  the  earnings 
from  Source  I  are  approximately  $10  per  capita 
of  intermediate  town  and  village  population, 
or  a  total  of  $150,000  per  annum. 

On  the  basis  of  the  conclusions  reached  in 
Chapter  IV,  because  this  hypothetical  road 
is  short,  we  estimate  the  operating  expense 
at  the  minimum  determined  for  normal  roads, 
or  $3100  per  mile  of  track  per  year,  which 


ECONOMIC  RELATIONS  101 

aggregates  S93,000  per  year.  The  taxes  will 
be  approximately  the  minimum  of  $250  per 
mile  of  track,  or  $7500  per  year.  The  cost 
of  construction  will  also  be  approximately 
the  minimum  of  the  limits  heretofore  deter- 
mined, or  $26,550  per  mile,  which  is  a  total  of 
$801,600. 

The  surplus  earnings,  after  deducting  the 
operating  expenses  and  taxes,  will  be  $49,500. 
The  interest  on  the  cost  of  construction,  at 
6  1/2  per  cent,  per  annum,  will  amount  to 
$52,104.  This  road  will  therefore  fail  to  earn 
its  interest  by  $2604  and  will  fall  short  of  mak- 
ing its  securities  negotiable  by  approximately 
$50,000.  The  project,  therefore,  fails  as  an 
economic  success. 

SUMMARY  FOR  CASE  1 

The  following  summary  may  be  of  value  in 
showing  in  statement  form  how  the  deficit  in 
Case  1  is  arrived  at: 


102     ECONOMICS  OF  INTERURBAN  RAILWAYS 

TABLE  I.— SHOWING  APPLICATION  OF  PRIN- 
CIPLES HERETOFORE  DEDUCED  TO 
HYPOTHETICAL  CASE  1 

Operating  revenue — 15,000  intermediate  town  and 

village  population,  at  $10  per  capita $150,000 

Operating  expense — 30  miles,  at  $3100  per  mile 

per  year 93,000 

Net  revenue $57,000 

Taxes— 30  miles,  at  $250  per  mile 7,500 

Surplus  applicable  to  fixed  charges 49,500 

Interest  on  $801,600,  at  6  1/2  per  cent 52,104 

Deficit $2,604 

MODIFICATION  OF  CASE  1 

If  we  estimate  that  the  total  intermediate 
town  and  village  population  is  18,000  instead 
of  15,000,  the  results  for  Case  1  will  be  modified 
as  indicated  in  Table  II  on  the  following  page. 

It  will  be  observed  that  the  surplus  earnings, 
after  deductions  for  operating  expense  and 
taxes,  will  approximately  equal  one  and  one- 
half  times  the  interest  charges  computed  on  the 
basis  of  6  1/2  per  cent,  of  the  cost  of  construc- 
tion. The  intermediate  town  and  \'illage  popu- 
lation of  this  hypothetical  road  is  600  per 
mile  of  track.     It  may  therefore  be  concluded. 


ECONOMIC  RELATIONS  103 

in  a  general  way,  that  such  a  projected  road, 
serving  a  primary  terminal  and  intermediate 
town  and  village  population  only,  should  have 
not  less  than  an  average,  of  600  of  intermediate 
town  and  village  population  per  mile  of  track. 
Inasmuch,  however,  as  the  above  operating 
expense  and  cost  of  construction  were  computed 
at  the  minimum  of  the  deductions  heretofore 
made,  it  is  apparent  that  should  the  elements 
of  construction  or  operation  indicate  costs 
higher  than  the  minimum,  a  proportionately 
greater  intermediate  town  and  village  popula- 
tion per  mile  of  track  must  prevail  to  make 
such  a  road  a  financial  success. 

TABLE  II.— SHOWING  APPLICATION  OF  PRIN- 
CIPLES HERETOFORE  DEDUCED  TO  HYPO- 
THETICAL CASE  1  AS  MODIFIED 

Operating  revenue — 18,000  intermediate  town  and 

village  population,  at  $10  per  capita $180,000 

Operating  expense — 30  miles,  at  $3100  per  mile 

per  annum 93,000 

Net  revenue $87,000 

Taxes— 30  miles,  at  $250  per  mile 7,500 

Surplus  applicable  to  fixed  charges $79,500 

Interest  on  $801,600,  at  6  1/2  per  cent 52,104 

Surplus  applicable  to  dividends $27,396 


104     ECONOMICS  OF  INTERURBAN  RAILWAYS 

CASE  2 

In  Case  1  we  had  a  normal  road  30  miles 
long  serving  only  a  primary  terminal  of  50,000 
population  and  an  intermediate  town  and  vil- 
lage population  of  from  15,000  to  18,000.  In 
this  case,  however,  the  road  will  be  extended  10 
miles  farther  to  a  city  with  a  population  of 
20,000,  qualifying  as  a  secondary  terminal 
(Source  II).  The  intermediate  town  and  vil- 
lage population  (Source  I)  will  be  15,000.  The 
total  miles  of  track  will  be  40  and  the  distance 
between  terminals  40  miles. 

As  in  the  preceding  case,  the  revenue  from 
Source  I  will  be  $10  per  capita  of  intermediate 
town  and  village  population,  or  $150,000  per 
annum.  In  obtaining  the  revenue  from  Source 
II,  the  character  of  the  terminals  may  be  taken 
into  consideration,  for  the  conditions  conducive 
to  intercommunication  between  the  primary  and 
secondary  terminals  will  have  a  bearing  on  the 
revenue.  It  is  here  estimated  that  the  primary 
terminal  is  the  capital  of  a  state  and  the  sec- 
ondary terminal  is  the  county  seat  of  the  ad- 
jacent county.  In  this  instance  there  is  the 
average  cause  for  intercommunication,  and  the 


ECONOMIC  RELATIONS  105 

average  earnings  under  these  conditions  can  be 
properly  estimated,  viz.,  $8  per  capita  of  sec- 
ondary terminal  population,  which  gives  a  total 
from  Source  II  of  S160,000. 

SUMMARY   OF   CASE   2 

The  complete  compilation  of  operating  re- 
sults for  Case  2  is  as  follows  r 

TABLE    III.— SHOWING    APPLICATION    OF    PRIN- 
CIPLES HERETOFORE  DEDUCED  TO  HYPO- 
THETICAL CASE  2 

Revenue  from  Source  I — 

15,000  intermediate  town  and  village  popula- 
tion, at  $10  per  capita $150,000 

Revenue  from  Source  II — 

20,000  secondary  terminal  population,  at  $8  per 
capita 160,000 

Total  gross  revenue $310,000 

Operating  expenses — 
40  miles,  at  $4350  per  mile 174,000 

Net  earnings $136,000 

Taxes — 40  miles,  at  $250  per  mile 10,000 

Net  earnings  applicable  to  fixed  charges $126,000 

Interest  on  construction  cost,  $1,440,000,  at  6  1/2 
per  cent 86,400 

Surplus  earnings  applicable  to  dividends $39,600 


106     ECONOMICS  OF  INTERURBAN  RAILWAYS 

The  conditions  of  service  in  the  above  in- 
stance entailed  a  greater  number  of  car  move- 
ments than  in  Case  1,  and  the  operating 
expenses  were  approximately  the  maximum  of 
those  deduced  in  Chapter  IV,  viz.,  $4350  per 
mile  of  track,  or  a  total  of  $174,000  per  annum. 
The  construction  cost  in  this  case  would  also 
be  higher  than  in  Case  1  and  was  estimated 
at  $35,000  per  mile,  or  $1,440,000  for  40  miles. 

This  road  would  fall  a  little  short  of  pro- 
ducing such  economic  results  as  would  qualify 
it  as  a  commercially  feasible  project,  but  if  the 
population  of  the  secondary  terminal  were 
22,000  it  would  just  about  so  qualify. 

MODIFICATIONS    OF   CASE   2 

If  the  primary  terminal  were  merely  the 
county  seat  of  one  county  and  the  secondary 
terminal  the  county  seat  of  the  adjacent 
county,  it  is  not  believed  that  the  revenue 
from  Source  II  could  be  safely  estimated  as 
high  as  $8  per  capita.  If,  on  the  other  hand, 
the  primary  terminal  were  a  city  of  1,000,000 
population  and  therefore  exercised  a  predomi- 
nating commercial  influence  over  the  second- 


ECONOMIC  RELATIONS  107 

ary  terminal,  the  estimot^  „<• 

Source  II  J.ht  hf  ,  """"Ss  due  to 

theextreL"fe,J:i— ''^  *°  «5,  and  in 

-y  terminal  ZSln     A  """'''■  f  ''"'""'■ 

ondary  terminal  ptulal/r'  ''  *''  ^^" 

greater  distance  from  fh.  '""°^'^  ^ 

t'^e   intercommuntuo^Jr 7e  ff"!,'' 
and  a  reduction  nf  fv.  reduced, 

H  Should  retad  ^reiVT  '""^^^ 
fflately  $1  per  capita  for  eveTvTo  "V^'^f''- 
creased  distance  between  :;rLmin"a;;^"^^- 


CASE   3 


aary  terminal  of  50  000  „  ?^  ^^'^  "  P"" 
inediate  town  and  vi,'.  ^^P"'^*'""'  ^^  mter- 
and  a  seconZt  1  ^'  Population  of  15,000 
In  Case  3lhle~''°""''«-<>f  20,000. 

wH^the  exce^rtt^r^;    £"1  tr 
10-m.le  extension  of  the  line  f7   *  ^'"" 

population  and  another  10  1,!  T  "•' '°°'' 
a  city  of  20,000  Popul^  oi  o'lSr"  '" 
tance  to  be  clflsc:p^  «  ,     suincient  impor- 

terminal,  and  th  fn^^S^^^^^^^  T" '-^ 

iicermediate  town  and  village 


108     ECONOMICS  OF  IXTERURBAX  RAILWAYS 

TABLE     IV.— SHOWING    APPLICATION  OF 
PRINCIPLES   HERETOFORE  DEDUCED 
TO  Hri'POTHETICAL  CASE  3 

Revenue  from  Source  I — 

20,000  population,  at  $10  per  capita $200,000 

Revenue  from  Source  II — 

First,    the   population   of   the   first   secondary- 
terminal,  viz.,  20,000,  at  $8  per  capita 160,000 

Second,  the  population  of  the  second  secondary 

terminal,  viz.,  20,000,  at  $7  per  capita 140,000 

Total  gross  revenue $500,000 

Operating  expenses — 

60  miles,  at  $4350  per  mile 261,000 

Net  earnings  appHcable  to  taxes  and  fixed 

charges $239,000 

Taxes — 60  miles,  at  $250  per  mile 15,000 

Net  earnings  applicable  to  fixed  charges $224,000 

Interest   on   construction,    $35,000  per  mile,  or 

$2,100,000,  at  6  1/2  per  cent 136,500 

Surplus  earnings  applicable  to  dividends $87,500 

population  will  be  increased  to  20,000.  The 
primary  terminal  is  40  miles  distant  from  the 
first  secondary  terminal  and  60  miles  from  the 
second  primary  terminal,  and  the  secondary 
terminals  are  20  miles  distant  from  each 
other. 

The  revenue  from  Source  I,  on  the  §10  per 


ECONOMIC  RELATIONS  109 

capita  of  intermediate  town  and  village  popu- 
lation basis  heretofore  used,  will  be  $200,000 
per  annum. 

As  to  the  revenue  from  Source  II,  we  have 
the  following  items :  First,  the  return  from  the 
population  of  the  first  secondary  terminal,  viz., 
20,000,  at  $8  per  capita,  or  a  total  of  $160,000; 
second,  the  return  from  the  population  of  the 
second  secondary  terminal.  This  latter  termi- 
nal, being  60  miles  from  the  primary  terminal, 
will  be  entitled  to  an  estimate  of  approximately 
$6  per  capita  from  the  viewpoint  of  its  relations 
with  the  primary  terminal;  and  being  20  miles 
from  the  first  secondary  terminal,  it  will  be 
entitled  to  an  estimate  of  $8  per  capita,  an 
average  of  $7  per  capita  for  the  20,000  popu- 
lation, or  a  total  of  $140,000. 

The  operating  expenses  are  on  the  basis  of 
$4350  for  each  of  the  60  miles  of  track.  The 
cost  of  construction  is  $35,000  per  mile,  as 
in  the  previous  instance,  or  a  total  of  $2,100,000. 

The  resume  for  Case  3  as  given  in  Table  IV 
on  the  preceding  page  shows  surplus  earnings 
applicable  to  di\'idends  of  $87,500,  which  indi- 
cates that  this  hypothetical  road  is  a  financially 
feasible  project. 


J-^ 


110     ECONOMICS  OF  INTERURBAN  RAILWAYS 
MODIFICATION   OF   CASE    3 

The  judgment  of  the  expert  must  be  carefully 
exercised  in  determining  the  intercommunica- 
tion between  the  primary  and  secondary  ter- 
minals and  between  the  two  secondary  terminals. 
The  same  general  reasoning  should  be  followed 
as  in  the  modification  of  Case  2.  If  the  second 
secondary  terminal  is  a  city  of  40,000  inhabi- 
tants, then  it  will  be  far  less  dependent  on  the 
primary  terminal,  and  the  intercommunication 
between  these  terminals  will  be  greatly  reduced, 
while,  on  the  other  hand,  the  intercommunica- 
tion between  the  two  secondary  terminals  will  be 
increased.  In  such  a  case,  the  value  of  the  first 
secondary  terminal  for  revenue  from  Source  II 
should  be  increased  to  perhaps  $10  per  capita 
of  its  population,  and  the  value  of  the  second 
secondary  terminal  should  be  decreased 
to  perhaps  $4  per  capita  in  estimating  the 
revenues  from  Source  II. 

Where  the  above  conditions  exist,  in  addition 
to  the  revenue  changes  the  cost  of  construction, 
will  also  undergo  modification.  Because  of  the 
importance  of  the  second  secondary  terminal 
and  its  influence  on  the  cost  of  construction  of 


ECONOMIC  RELATIONS  111 

the  road  by  entering  a  larger  city,  the  estimate 

for  this  case  wiU  be  $40,000  per  mile  of  track, 

or  $2,400,000  for  the  60  miles.     The  complete 

summary  under  Case  3  as  modified  is  as  follows: 

TABLE  v.— SHOWING  APPLICATION    OF  PRINCI- 
PLES HERETOFORE  DEDUCED  TO  HYPO- 
THETICAL CASE  3  AS  MODIFIED 

Revenue  from  Source  I — 

20,000  population,  at  SIO  per  capita $200,000 

Revenue  from  Soiu-ce  II — 

First,    20,000    population    of    first    secondary 

terminal,  at  SIO  per  capita 200,000 

Second,  40,000  population  of  second  secondary 

terminal,  at  $4  per  capita 160,000 

Total  gross  revenue §560,000 

Operating  expense 261,000 

Net  earnings  applicable  to  taxes  and  fixed 

charges $299,000 

Taxes 15,000 

Net  earnings  applicable  to  fixed  charges S284,000 

Interest   on    construction,    $40,000   per    mile,    or 

$2,400,000,  at  6  1/2  per  cent 156,000 

Surplus  applicable  to  dividends $128,000 

This  third  hypothetical  case  represents  ideal 
conditions  for  an  electric  interurban  project. 
It  indicates  in  a  general  way  the  territory  nec- 
essary to  the  production  of  satisfactory  eco- 
nomic results. 


'\ 


CHAPTER  Vn 
CONCLUDING  REMARKS 

THE  foregoing  discussion  and  tables  should 
enable  the  promoter  and  investor  to  see 
more  clearly  the  economic  relations  between  the 
operating  and  construction  statistics  that  we 
have  compiled  in  the  previous  chapters,  and  they 
should  have  a  better  conception  of  the  factors 
that  are  necessary  for  the  success  of  projected 
electric  interurban  railways.  While  the  fun- 
damental elements  necessary  to  an  economic- 
ally feasible  road  have  been  determined  within 
approximate  limits  for  simply  normal  roads 
operating  in  normal  territory,  it  is  beUeved 
that  the  hazard  of  indiscriminately  applying 
these  limits  to  all  cases  will  be  fully  reaUzed, 
and  that  the  necessity  of  employing  expert 
talent,  with  mature  discriminating  judgment, 
to  estimate  the  probable  performances  of  a 
projected  road  is  fully  appreciated.  It  is  also 
believed    that    projected    electric    interurban 

112 


CONCLUDING  REMARKS  113 

railways  that  to  the  inteUigent  layman  do 
not  qualify  as  economically  feasible  proposi- 
tions, under  the  limits  we  have  set  forth,  would 
better  be  left  unconstructed. 

From  the  statements  made  herein  the  con- 
clusion may  be  drawn  that  a  great  number 
of   the   electric   interurban   railways   now  in 
operation  are  not  the   commercial  successes 
they  are  generally  considered  to  be,  and  in 
this  conclusion  the  writer  fully  concurs.     This 
does  not  mean  that  there  are  not  many  profit- 
able electric  interurban  railways,  for  there  are 
many  such;  but  this  only  serves  to  emphasize 
the  fact  that  it  is  suicidal  to  rush  into  electric 
interurban  construction  unless  a  proper  study 
is  made  of  existing  conditions  and  the  factors 
underlying  success.     At  the  present  time  there 
are  territories  susceptible  of  developing  profit- 
able   electric    interurban    railways.     As    the 
town  and  village  population  continues  to  in- 
crease, there  will  be  many  more  such,  and  the 
promoter  and  investor  who  use  the  principles 
obtained  from  experience  in  a  scientific  study 
of  a  projected  line  will  most  surely  and  most 
quickly  be  rewarded  by  financial  success. 


INDEX 

Conducting  transportation,  classification  of  prinaary  ac- 
counts, 59 

Principal  primary  accounts,  63 
Construction  cost,  classification  of  primary  accounts,  74 

Road — primary  account  estimates,  77 

Equipment — primary  account  estimates,  89 

General  Expenditures — primary  account  estimates,  91 

Summary  of,  93 

General  conclusions,  96 
Electric  railways,  classification  of,  7 
Electric  interurban  railways,  types  of,  8 
Equipment,  classification  of  primary  accoimts,  53 
Economic    relations,    operating    revenues,   operating  ex- 
penses and  cost  of  construction,  99 
Freight  revenue,  possibilities  of,  7 
Hypothetical  application,  case  1,  100 

Case  1  modified,  102 

Case  2,  104 

Case  2  modified,  106 

Case  3,  107 

Case  3  modified,  110 
Operating  revenue,  classification  of,  16 

Relation  to  population  served,  23 

From  source  2,  general  conclusions,  35 

General  conclusions  concerning,  42 
Operating  expenses,  classification  of,  44 

Ways  and  structures,   classification  of  primary  ac- 
counts, 45 
Most  important  primary  accounts,  49 
115 


116  INDEX 

Operating  equipment,  classification  of  primary  accounts,  53 
Maintenance  and  depreciation  of,  55 
Traffic,  classification  of  primary  accounts,  57 
General  and  miscellaneous,  classification  of  primary 

accounts,  64 
Total  of,  67 
Population  served,  classification  of,  11 
Passenger  revenue  as  compared  to  other  than  passenger 

revenue,  18 
Statistics,  table  of. 

Revenues  of  lines  having  "  Primary  "  and  Intermediate 

Population,  but  no  "Secondary"  terminal,  21 
Revenues  of  lines  having  "Primary"  terminal,  one  or 
more  "Secondary"  terminals  and  intermediate 
town  and  village  population,  29 
Revenues  from  sources  1  and  2  divided,  31 
Relation  between  revenue  and  car  miles  operated,  37 
Actual  operating  expenses,  ways  and  structures,  47 
Actual  operating  expenses  for  equipment,  54 
Actual  operating  expenses  for  traffic,  58 
Actual  operating  expenses  for  conducting  transporta- 
tion, 62 
Actual  operating  expenses  for  general  and  miscellane- 
ous, 66 
Actual  general  operating  expenses,  68 
Actual  taxes  assessed,  71 

Estimated    construction    cost,    various   primary   ac- 
counts, 94 
Steam  railway  revenues  compared  with  electric  interurban 

railway  revenues,  38 
Taxes,  70 
Traffic  sources,  classification  of,  14 


r 


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